Avoid these 7 common mistakes when buying health insurance

Selecting the right health insurance plans is a critical financial and healthcare decision. A wrong choice can lead to financial strain, limited medical options, or claim rejections when you most need coverage. However, many buyers make mistakes that could have been easily avoided with better information. Understanding the complexities of health insurance ensures you choose a plan tailored to your needs and budget.

Whether buying insurance for the first time, switching policies, or reviewing an employer-provided plan, avoid making the following errors:

#1 Ignoring total cost beyond premiums

Many policyholders pay attention only to the premium when selecting a health insurance plan. They do not see that premiums constitute only a small portion of total costs. Other considerations include deductibles, co-payments, co-insurance, and out-of-pocket maximums. A plan with a very low premium usually has high deductibles and a high co-insurance rate, resulting in a huge expenditure when medical attention is required. This is especially important when choosing health insurance plans for family, as the cumulative costs can quickly add up.

#2 Ignoring network restrictions and provider availability

As part of the network, health insurance companies team up with hospitals, doctors, and specialists to offer treatment for their policyholders. Treatment outside the network is costly, and claims are often denied. You are expected to check the network restrictions before purchasing the plan, especially if you have a preferred healthcare provider. If you move to another location or need special care, then network availability is even more crucial. Not verifying this will result in unpleasant out-of-pocket shocks and possibly no access to the medical facility you would prefer.

#3 Not knowing policy exclusions and limitations

All health insurance policies have exclusions - those treatments and services the insurer won't cover. Some of the most common exclusions are:

• Cosmetic and elective procedures
• Infertility treatments and maternity-related expenses in basic plans
• Alternative treatments, unless specifically mentioned
• Pre-existing conditions (depending on the waiting period)

Failing to read these clauses can result in claim denials when medical care is most needed. If a condition that requires treatment is not covered, you may have to bear the full cost. Some treatments have long waiting periods before coverage begins. Certain conditions might only be partially covered, leaving policyholders with high medical bills.

#4 Selecting inadequate coverage because of low premium

A low-premium policy sounds affordable, but it usually brings along the tag of lower coverages, huge co-payments, or minimal hospital networks. It means a lot of out-of-pocket expenses in times of medical emergency. The amount insured, the benefits of hospitalisation, and other additional coverages should be weighed before deciding on a policy.

#5 Not considering waiting periods for pre-existing illnesses

Most health insurance plans have a waiting period before any pre-existing diseases are covered. Depending on the insurer and the ailment, this can be between one and three years. But if you need to cover an existing illness immediately, opting for a policy with a lesser waiting period or a rider that covers the same would make sense.

#6 Not considering no-claim bonus and renewal benefits

A no-claim bonus (NCB) raises the sum assured if no claim is made for a policy year. Many people miss this factor and, in turn, ignore the potential reward. Some add up to 100% NCB to increase the sum assured, while other insurers reduce each year's renewal premium for any claim-free year. In some cases, long-term coverage can also be improved by checking NCB and renewal incentives.

#7 Not comparing claim settlement ratio and insurer credibility

The claim settlement ratio (CSR) indicates the percentage of claims an insurer has settled compared to the total claims received. A higher CSR suggests a reliable insurer. Additionally, checking reviews, customer feedback, and grievance resolution timelines helps assess insurer reliability.

Choosing the right health insurance plan requires careful evaluation beyond just premiums. Understanding total costs, network restrictions, policy exclusions, critical illness coverage, waiting periods, and insurer reliability ensures comprehensive protection.

The right insurance policy provides financial stability and peace of mind. Regularly reviewing your policy ensures it continues to meet your healthcare needs. Taking the time to compare plans thoroughly today can prevent costly mistakes in the future.