There are so many things which affects your claim settlement and the most important of all of them is ROOM RENT CAPPING. Now lets understand this quickly with the help of an example. Mr. A has a health insurance policy of Rs. 3,00,000 in which there is a room rent capping of 1% of sum assured which comes to Rs. 3000 (3,00,000*1%) room rent limit on a per day basis. He met with an accident and was hospitalized for 4 days. The rent of the room in which he was hospitalized was Rs. 4500 per day. Now total expenditure on 4 days was Rs. 2,00,000 which includes Rs. 18,000 (4500*4) as room rent and the balance Rs. 1,82,000 (2,00,000 – 18000) as other expenditure. Now in this case if I ask you how much claim would Mr A get from the insurance company. Most of us would Say Rs. 1,94,000 (1,82,000 +12,000) This figure we arrived at after deduction of Rs. 6000 (1500*4) from the room rent. His eligibility of room was for Rs. 3000 on a daily basis but he got admitted to a room whose rent was Rs. 4500 that is Rs. 1500 extra. Since the stay was for 4 days , hence insurance company would not pay Rs. 6000 (1500*4). But this is not how the claim would be calculated. Generally in a hospital, all other charges are linked to room rent. So if there is a violation of room rent limit, the insurance company makes the reimbursement on a Pro rata basis. So in the above example, the insurance company will find out Rs. 3000 (room rent eligibility) was how much % of Rs. 4500 which comes to 66.67%. Actual claim was Rs. 2,00,000. So, instead of paying Rs. 2 Lac, insurance company would reimburse only Rs. 1,33,333 (2,00,000*66%). So to avoid this scenario, just go for a health insurance policy which does not have any restriction on room rent.
Can i claim from 2 separate Health Insurance Policies ?
This is a very common question which people ask me “can i claim my hospital bill from two separate insurance Company” ? Normally this question comes from those people – Who are already covered under group health insurance being offered by their employer and they also have taken a retail health policy separately. Or Even there are people who have two retail health policies. So the answer to the question is “Yes, one can claim hospital bill from two separate companies”. But you need to understand the process for the same. For Example: A person has two health insurance policy (one could be from employer and other could be a retail health policy or both could be two separate policy). Policy from Company A with sum insured of Rs. 3 lac and another policy from Company B with sum insured of Rs. 6 Lac. He wants to undergo a treatment which will cost him Rs. 8 Lac. Now he can’t opt for the cashless benefit from both the companies at one go, so he has to choose first of all either of the one company from which he wants to take the cashless benefit . Lets assume he opts for the Company B and was paid for Rs. 6 lac. Now, this person has to approach Company A for the balance payment of Rs. 2 lac, for which he has to submit the below mentioned 2 documents. After getting the above two documents, Company A will understand that total bill was Rs. 8 lac and Rs. 6 lac has already been paid by Company B. So they will pay the balance bill of Rs. 2 lac. Few Important things to be kept in mind: 1.This person would be taking pre authorization from Company B for the cashless benefit with the help of hospital. 2. At the same time, what he should also do is just intimate company A saying he is undergoing xyz treatment in a hospital and would be opting for the reimbursement and should take a claim intimation ID from company A. This is one of the most important thing which we forget. Many a times it do happen that when it comes to reimbursement, we tend to ignore giving intimation to the insurance company assuming anyway you will apply for the reimbursement, but that approach is wrong. Its always better to intimate in advance and get a claim intimation number. And at the time of submission of claim form,just mention that claim intimation number on the same. 3. In the above example, this person is going for cashless benefit from company B first and then opting for reimbursement from company A at a later stage. However, its the right of this person as to which company to approach first. He could have done otherwise also that is opting for cashless with Company A first and then going for reimbursement with the Company B later
The most important factor which impacts your health insurance claim
Whenever one is going to shop for a suitable health insurance company, there are lot many factors which one has to look into. But today, i am going to share with you THE MOST IMPORTANT FACTOR which one should look at and that is “Room Rent Capping” Lets understand this how “room rent capping” affects your claim and what can be done to avoid the same. There are 2 types of room rent capping: 1 – Capping on room rent on a % basis: Let’s straight away try to understand this with the help of an example. Suresh has a Mediclaim policy of Rs. 3,00,000 in which there is a room rent capping of 1% of sum assured which comes to Rs. 3000 (3,00,000*1%) room rent limit on a per day basis. He met with an accident and was hospitalized for 4 days. The rent of the room in which he was hospitalized was Rs. 4500 per day. Now total expenditure on 4 days was Rs. 2,00,000 which includes Rs. 18,000 (4500*4) as room rent and the balance Rs. 1,82,000 (2,00,000 – 18000) as other expenditure. Now in this case if I ask you how much claim would Suresh get from the insurance company. Most of us would Say Rs. 1,94,000 (1,82,000 +12,000) This figure we arrived at after deduction of Rs. 6000 (1500*4) from the room rent. His eligibility of room was for Rs. 3000 on a daily basis but he got admitted to a room whose rent was Rs. 4500 that is Rs. 1500 extra. Since the stay was for 4 days , hence insurance company would not pay Rs. 6000 (1500*4). But this is not how the claim would be calculated. Generally in a hospital, all other charges are linked to room rent. So if there is a violation of room rent limit, the insurance company makes the reimbursement on a pro rata basis. So in the above example, the insurance company will find out Rs. 3000 (room rent eligibility) was how much % of Rs. 4500 which comes to 66.67%. Actual claim was Rs. 2,00,000. So, instead of paying Rs. 2 Lac, insurance company would reimburse only Rs. 1,33,333 (2,00,000*66%). 2 – Capping on room rent on “Room Category” basis: This one is very tricky although insurance companies will not accept this. To explain the same in detail, refer to the image below which is the room rent rate of one of the premier hospital. Observation in the above image: ● There are 7 different categories of room which one can choose for taking treatment. ● You take any category and you will find that higher the room category, higher will be the charges. ● Even advance deposit differs as per the room category. ● But i want to bring your attention to the room rent row titled as WARD. If you opt for the common category, per day rent would be Rs. 950 which goes upto Rs. 22,000 for Suite room ● Looking at the room rent category, it seems that “common”, “economy” and “Twin” are available on a shared basis which means more than one person is staying. And from “special” onwards , single pvt room is available. ● So even, someone wants to opt for the single pvt room, one can choose from 4 different categories which are “special”, “Deluxe”, “super Deluxe” and “suite”. Now lets understand how capping on room rent category works. There are many insurance companies who says they are offering “Single Pvt Room” but when you look at the policy wording document their definition of “Single Pvt Room” is lowest category of single pvt room within the hospital with basic amenities like AC, attach bathroom and one extra bed for the caretaker of patient. So as per the definition, looking at the above image, the lowest category of single pvt room would be “special” room . So in this case, if a person opt for “Deluxe” room, then claim would be paid on pro rata basis as mentioned above. My take: ➢ “Room category” capping is better than “% Capping”: Taking above example only, Rs. 3000 (1% of sum insured of Rs. 3 lac) might seems good today but what about 5 years down the line . The room which i am getting today, the same room’s rent will increase going forward and i wont be able to get it again at Rs. 3000. But in case of “room category” capping, i need not worry about the inflation, bcz capping is on “room category” irrespective of the rent of that particular category of room. ➢ Ideally opt for a policy, which does not have any capping in room rent. Neither in terms of % nor in terms of category also.
Market v/s Mindset
As an investor, when you are investing your hard earned money in growth assets like equity and real estate, you are definitely expecting inflation beating returns. But the important point to remember is that there are two important factors which is going to affect the return (either positive or negative) you are expecting. 1. MARKET: This is not in your control. 2. MINDSET: This is totally in your control. 1. MARKET: There are many variables impacting the market which are inflation, interest rate, crude oil, political factors, events happening in other countries etc. As an investor, the way market behaves is absolutely not in your control because market gets impacted by so many factors mentioned above. 2. MINDSET: “Mindset” is a way of looking at a particular thing depending on your past conditioning and experiences. You could fall under either of the 4 categories of mindsets mentioned below: A. FIXED MINDSET: Under this mindset you do not deviate from your thinking. For Example: You have been doing SIP from last 7 to 8 years and have been getting good returns. But once you tried to put some money as a lumpsum in which either you got negative returns or the return which you actually got was lesser than SIP returns. So this made you to believe that lumpsum never gives good returns and thus this becomes your fixed mindset. Even if there is a steep fall in the stock market and presents you a good investment opportunity then also your fixed mindset will not allow you to put lumpsum. B. COLLECTIVE MINDSET: Under this mindset, you do not use your mind rather you get influenced by the decision of other people even though it might be illogical. Our collective mindset is getting shaped by print media (newspapers, magazines), electronic media (TV) and social media (facebook, what’s app) etc. The legendary investor Mr. Warren buffet has given a simple and sensible way of making money that is “Be greedy when others are fearful and be fearful when others are greedy”. But because of collective mindset, we tend to do what others are also doing. For Example: During market crash of 2008, most of the people were fearful. So if someone would have implemented the teaching of Mr. Warren Buffet, that was actually the time to become greedy and invest more. But because of collective mindset, most of us became fearful because others were also fearful and we did not invest in that crash and thus could not participate in the really that followed later on. C. DEFENSIVE MINDSET: This is one of the worst mindset to be in. Under this mindset “Return of capital” is more important than “return on capital”. Under this mindset, you play safe. For Example: If you had lost money in 1992, 1999 and 2008 market crash, then this mindset did not allow you to invest further in stock market. Post making the losses what you actually did was you invested in bank fixed deposits. D. PRODUCTIVE and GROWTH MINDSET: Under this mindset: 1. You are always looking for money making opportunities. 2. You learn from your previous mistake and you do not repeat those mistakes again and again. 3. You give more importance to “learning” rather than your “experience”. 4. You are willing to invest time so that you can thoroughly study about growth assets and take a calculative risk. 5. You are willing to risk yourself into unchartered territory. For Example: You might be an expert real estate investor and might be knowing nothing about stock market. But you never say that stock market is not your’s cup of tea rather you start educating yourself about stock market and are willing to take risk. If your mindset is “Productive and growth oriented” then its well and good. But if it’s not then its high time to change it. Because unknowingly, unintentionally, unpurposefully your mindset is not only affecting your area of investment but it’s also affecting all other areas of your life as well. Someone has rightly said that: Your MINDSET becomes your THOGUHTS. Your THOUGHTS becomes your ACTION. Your ACTION becomes your HABITS. Your HABIT determines your DESTINY.
FAQ on CRITICAL ILLNESS Policy
Today, I have written in detail about “CRITICAL ILLNESS” policy in the form of FAQ (Frequently asked Question). Before I proceed forward, I would like to state that in insurance, two categories of policy are there 1. Indemnity based policy: Under such policy, insurer reimburse you the amount which has actually been incurred by you. For example: mediclaim, car insurance. 2. Fixed Benefit policy: Under such policy, insurer pays you the lumpsum benefit irrespective of the expenditure incurred by you. For example: Critical illness Policy. If you have opted for a Rs. 10 lacs critical illness policy which covers cancer and post taking this policy if you are detected with cancer then insurance company will pay you lumpsum payment of Rs. 10 lac. Now its entirely upto you how you want to utilize this amount. So now let’s start with the FAQ on critical illness policy. Q.1-What is critical illness policy ? Ans – It’s a fixed benefit policy which pays you a lumpsum just on the basis of diagnosis of critical illness or life threatening ailments mentioned in your policy document. Some of the examples of critical illness are coma, heart attack, cancer, kidney failure, paralysis etc. Q.2 – I already have a mediclaim policy. Then do I need to take a critical illness policy as well ? Ans-Mediclaim policy is an indemnity policy which will not pay you more than the actual hospitalization cost or actual sum insured whichever is lower. For Example: You got paralysis, now the treatment of this disease will be covered under “mediclaim policy” but because of paralysis there might be loss of income, more expenditure on specialized treatment, permanent or partial disability etc. To overcome this, a lumpsum payment from your critical illness policy (which has covered paralysis) would act as a much needed support. Thus a critical illness policy is not a substitute but it actually supplement your existing mediclaim policy. Q.3 – Should I take a standalone critical illness policy or take it as a rider ? Ans-My personal view is that you should always take standalone critical illness policy bcz of the following reasons: A. A stand alone critical illness policy covers more critical ailments as compare to a critical illness policy taken as a rider. B. Your sum insured for a rider critical illness policy cannot be more than the sum insured of actual base policy. Let’s assume you have a base policy of life insurance of Rs. 3 lacs then in this case your sum insured for your rider policy cannot be more than Rs. 3 lac whereas in case of standalone policy there is no such limitation. C. At any given point of time, you cannot discontinue your rider policy. But in case of you have individual life insurance policy and standalone critical illness policy, then if you want you can discontinue your critical illness policy. Q.4- Are there any conditions/special clause in critical illness policy ? Ans: Yes, normally the following conditions/special clause are there : A. Once you are detected with a critical ailment then you have to remain alive for 30 days to get the lumpsum.This is also called “survival period” clause. B. There is an initial waiting period of 30 to 60 days post taking the policy. During this period no claim illness will be covered. However this clause is not applicable for renewal policy. C. There will be waiting period of 3 to 4 years for pre existing disease. Most likely companies might refuse to issue you the policy itself incase you are already suffering from a critical illness disease. Q.5 – Is the premium of critical illess policy eligible for any tax benefit ? Ans: Yes it is eligible under section D upto a limit of Rs. 20,000 who are senior citizen and Rs. 15,000 for those who are not a senior citizen. Section D also gives tax benefit for the premium of mediclaim. So the benefit of Rs. 15,000 and Rs. 20,000 includes the premium of mediclaim as well. Q.6 – What is the most important point to be kept in mind while buying this policy ? Ans: Buy a policy which covers maximum critical illness. Also if there is any family history of a illness then one should take the policy which covers that illness atleast. Q.7 – Who should take this policy ? Ans: The bread earner of the family should definitely take this policy and if budget permits, it should be taken for one’s spouse and parents as well. Q.8 – Is medical check up compulsory for taking this policy ? Ans – If one’s age is below the age of 45, then no medical check up is required. However if someone’s age is 45+, then the company might ask you to go for a medical check up. Q.9 – Once I claim from this policy, can I renew the same policy again ? Ans: No, once you claim under this policy, then the policy ceases to exist and you cannot renew the same.