How to buy the best insurance cover for senior citizen parents
It’s best to buy insurance at an early age but most of our parents are either without an insurance cover or very inadequate cover. A standalone health insurance policy is often the best choice, but expensive to buy after 60. Here are some other options.
Every now and then I get a call from friends, asking about ways to ensure comprehensive insurance coverage for their parents. In some cases, there might be an existing coverage but low.
In other cases, there would be no coverage and a set of pre-existing diseases. The most common being diabetes and cardiovascular issues. The challenge then becomes getting an insurance, as insurers are reluctant to issue coverage to seniors with pre-existing conditions.
The other issue that arises is of the premium. For senior citizens, health insurance premium can be very expensive. Stuck with such issues, several people are not able to pick the right coverage for their parents.
Fortunately, these issues can be addressed, once you are aware of the full suite of options. Below are some cost-effective options.
Are parents covered in your group insurance cover?
The first option is to explore coverage under the employer’s group health insurance plan. Group health insurance is basically when a company ties-up with an insurer to offer medical insurance for its employees.
Within group health insurance, it is possible to structure the family definition to cover the employee, along with spouse, children, and parents. Even for companies with as few as 10 employees, such a group plan can be structured. Several organizations offer coverage for parents by default in their plan. A few companies may offer this as a voluntary plan, wherein employees would bear the cost of parental coverage.
Higher the participation and size of the group, lower would be the premium. For a 67-year old couple, such a plan could cost around Rs 36,000 plus taxes for a sum assured of Rs 3 lakh. Employer organized group plans have an advantage of no medical underwriting, and no waiting periods. This ensures that anyone who opts for the plan is guaranteed a coverage. The principal drawback of such a plan is that it is linked to your employment. So, when you change jobs, the coverage expires. On the balance, the group health plan for parents is significantly advantageous for an employee.
Non-employer group plans
These are plans offered by consumer platforms, whom you may be associated with. Examples of this would include banks, credit cards, health-care subscriptions, clubs and societies.
Such groups customise health policies for their customers and members. Policies are limited to account holders or existing members of these groups. Bulk buying helps these groups negotiate low premiums with the insurer.
For a 67-year old couple, such a plan would cost around Rs 35,000 excluding taxes, for a Rs 3 lakh insurance cover.
Most of these policies do not require a pre-medical check-up for issuance that implies easy access to a health policy. Moreover, buying policies from such groups have now become much easier, as these platforms now leverage technology from insurance distributors. Customers can pay using an online payment gateway and get an individual policy certificate. Since these group-relationships are relatively easy to manage, such plans can be sustained for much longer.
Coverage in such plans are similar to individual plans. So, such plans are likely to have waiting period for preexisting diseases, between 1 to 2 years. The disadvantage of such plans is that they generally do not provide no claim bonus. Also, these are not guaranteed to be life-long renewable.
The next set of plans to consider are top-up plans. A top-up plan provides coverage beyond a certain threshold called the deductible. Expenses incurred upto the deductible amount are not payable under the plan.These plans are meant to cover major surgeries or treatment expenses. Minor surgeries and treatments such as cataract, and dialysis do not get paid. Expenses for these treatments are well within the deducible threshold. Such a deductible allows the insurers to price the product very effectively, and without the usual restrictions of copay and disease-wise limits.
For example, super top-up plan offered by National Insurance Co for a 67-year old couple would cost around Rs 18,000 plus taxes for a Rs 7 lakh coverage with a Rupees 3 lakh deductible. Such plans would have the typical waiting period, between 2 to 4 years, for preexisting ailments.
While buying such a plan, you should ensure that this is a super top-up and not a regular top-up. The big difference is that in a super top-up, all hospitalization expenses incurred in the policy year are considered for the deductible threshold. That is why it is called aggregate deductible. In case of a regular top-up plan, the deductible is applied for each and every claim. So, if you have two hospitalisations in a year, the deductible would be applied twice in a regular top-up plan.
Senior citizens insurance plans
These are exclusively designed for senior citizens. A Bajaj Allianz Silver Health plan is a good one to refer. Such plans generally have low sum assured options, upto Rs 5 lakh.
The big advantage is that the threshold for pre-existing ailments are much lower, 1 year, than the standard individual plan. Such plans however carry some limitations. Pre-existing ailments are covered only upto 50% of the sum assured. In case you opt for a hospital outside the network of the insurer, a 20% co-pay is applied. This could be waived on payment of extra premium.
A few insurers offer senior citizen plans that apply compulsory copay on each and every claim, irrespective of whether it is in a network hospital or not. There may be capping on some diseases such as cataract. Annual premium for a single person of 67-year old couple would cost around Rupees 55,000 plus taxes for Rupees 5 lakhs sum assured. Such plans are life-long renewable and offer no-claim bonus.
Standard individual plans
The last option to consider for a senior citizen are the standard individual plans. Such plans are most comprehensive. These could be availed without copay, and without disease wise restrictions. Such plans are also renewable life-long.
However, for individuals with pre-existing diseases, it is generally difficult to get coverage. Most insurers would ask for a medical check-up before issuance of the plan. Such plans also come with a waiting period, between 2 to 4 years, for preexisting diseases. A regular health insurance plan for a 67-year old couple would cost about Rs 70,000 plus taxes for Rs 5 lacs sum assured.
I specifically took the example of a 67-year old, because a relative’s father of this age, recently underwent an open-heart surgery. He used to walk 10 kms everyday, and infact was fit enough to do 75 push-ups at a time. Still, three of his arteries were suddenly diagnosed with severe blockage. The total bill for his expenses turned out to be upwards of Rs 7.5 Lakh. He got his treatment done in a tier-1 hospital in Gurgaon.
Thankfully, this relative was among the few, who had called me several years ago to discuss his insurances, and more importantly, taken the advice to fix his insurances. Because of this, his father was adequately insured.