We are a 75-year-old couple holding a mediclaim policy of ₹4.5 lakh from a PSU insurer. The coverage has remained unchanged for the last 10 years and has been in continuation for the last 30 years without any claim. There has been no illness or disease. My wife has asthma problem due to dust smoke. Should we port our policy or add a new one?
– Name withheld on request
Most health insurance plans have an upper limit for a no-claim bonus (NCB). In your case, it is likely that the base sum insured was ₹3 lakh. The maximum NCB allowed to accrue may have been 50%. That’s why the aggregate sum insured is capped at ₹4.5 lakh. However, at your age this level of sum assured is grossly inadequate. You should consider increasing the sum insured to at least ₹10 lakh. The thumb rule is maintaining health coverage equal to one’s annual income.
You have three potential ways to increase your coverage. The easiest option may be to ask your existing insurer to increase the sum insured in the same policy. Insurers generally entertain these requests at policy renewal. Since you do not have any past history of claim or pre-existing illness, the incumbent insurer should be willing. However, if the policy carries any limits such as room rent or disease-wise limits, then it would be applicable for the increased sum assured as well. So, while the sum assured would increase, the remaining conditions would remain the same. The other aspect is that these legacy plans are generally expensive. In some of these plans incremental sum assured comes at a steep price. You must compare the incremental cost of increasing coverage in this plan with the other two options below.
Another option is to buy a top-up health insurance plan. With your clean health history, it should be possible for you to get a new plan. Here, you should opt for a deductible of ₹3-4 lakh. Claims up to the deductible amount would be payable under the current plan. Any claim over the deductible amount would be payable under the top-up plan, up to the sum insured. Top-up plans are generally inexpensive.
The third option would need some paperwork. You could port your existing plan to a new insurer. This would allow you to transfer all your lapsed waiting periods to the new plan. There would not be any waiting period for any pre-existing diseases or specific ailment. Given this context, the number of insurers, who would be willing to issue a policy would be limited.
The new insurer may require a declaration of good health from you and, in some cases, can even ask for a medical check-up before policy issuance. Despite the process, this approach may still be best suited if the current plan has major restrictions.
For example, many legacy plans have capping of ₹50,000 to ₹1 lakh on modern treatments. Given the increased incidence of claims under modern treatment, such capping can prove highly restrictive in the future. Similarly, if the new plan is significantly cheaper, it may be worthwhile.
(Abhishek Bondia is principal officer and managing director at SecureNow.in.)