Gimmicks of medical insurance

Gimmicks of medical insurance

Insurance regulator has to realign itself entirely to the benefit of the customers

Health is wealth. It is a commonly referred adage when people talk about importance of maintaining good health. A terribly bad health scenario  wipes out wealth of a person and even puts an ill person at the mercy of others to meet the medical expenses.

In today’s time, when we think of any unforeseen of saddled with expense from an accident or long-term illness, it sends shivers our spines. Are we sufficiently positioned to take on burgeoning medical treatment expenses in such situation? This is the question which baffles almost all of us.

A serious and life-threatening illness turns the situation traumatic. Everything else you are worrying about in life suddenly becomes unimportant. The only thing that could make it worst is managing the expenses of treatment of your illness. Fear looms large that the expenses will leave you personally responsible for huge bills that could wipe out all your life time savings.

Tremendous advances in medical technology and war on deadly diseases, which used to consume a human life fast & painfully, through new medicines, have been a boon. The world of medical science celebrates when they invade a deadly human consuming disease by inventing dependable treatment protocol. But the benefits of this technological revolution in medical sciences combating the diseases don’t percolate to the grass root level where populations are at higher risk to contract any disease. Despite claiming economic growth and improving standard of living, most people can’t even afford conventional treatments in government hospitals where treatment doses are available at subsidised prices.

Specifically speaking, it’s medical inflation that outpaces general inflation as  medical expenses are sky high. Elaborate medical treatment expenses could eat into your savings meant for the future. So your financial position strikes imbalance. These financial imbalances, which are basically risks, need to be taken care by managing them. A simple way of managing these risks is transfer of risks.

Here, getting a health insurance cover seems to be an obvious choice. Basically, by taking an insurance policy, we transfer the risk, so that in case of any incident we are not at loss.

Health Insurance is an insurance against loss due to ill health or hospitalizations. It safe guards your savings getting washed out in case of any unplanned illness, surgery or hospitalization and getting prepared for unexpected expenses. 

But the irony is that the health insurance scheme is sold by the insurance companies to generate wealth for themselves rather than extending a financial relief to the patient covered under the scheme. If anecdotes are to be believed, the health insurance policies have been most of the times annoying the policyholders whenever invoked for any medical claim. However, up to some extent, such policies in groups have proved less problematic at the time of claim settlement. Overall there is growing distrust in the medical insurance sold under the tagline of health insurance.

There is increasing distrust in the medical insurance market for privately bought covers. Covers bought by corporations, called group covers, seem to have less problems of claims getting rejected.

The anecdotes are supported by data.

Let me borrow some revelations from a May 2018 working paper, titled Fair Play in Indian Health Insurance which has done a deep dive into the sector. Two major concerns have emerged. One, claims are underpaid. Two, the rate of complaint against insurance companies selling health insurance companies is highest when compared with other countries.

It’s ironical that the paper after using some case studies reveals the unwillingness of insurance firms to even abide by the contracts they have written themselves, their arrogance in not even appearing for hearings when the customer goes to court and the irrelevance of the paltry fines imposed by the regulator when firms are found guilty.

Notably, the paper even documents the failure of the ombudsman system in insurance.

So, in the given scenario, buying health insurance is a risky proportion. You may not get the desired support when needed through a health insurance policy. You are at risk of paying a hefty premium for years and then facing the risk of the insurance company refusing to pay on  convoluted ground.

However, most of us are left with no option but to buy health insurance cover given the high and extractive costs of treatment. You should what policy you are buying. Always buy a policy through a known insurance agent and in the event of any claim you can easily catch hold of him to push the company to pay up. Last but not the least, The insurance regulator has to realign itself entirely to the benefit of the customers (policyholders)


(The views are of the author and not that of the institution he works for)