What to watch out for in the claim policy?

You may not be concerned about this until you have to make a claim but trust us, you will want to know if you need to pay anything upfront if you have a huge bill. It can be a heavy financial burden.

Cost sharing

To encourage the insured to pay attention and take responsibility for their health, policies often also require the insured to contribute to the expenses. It is done using one of these methods:

• Deductible/excess

A deductible is a flat amount that the policy owners have to pay by themselves. A per annum deductible, the most flexible kind, takes into account all expenses incurred within the year. A per disability per year deductible only counts all expenses incurred for the same illness or injury in the year. For these two kinds of deductibles, reimbursement benefits will kick in for the rest of the year after the deductible is satisfied. However, if it is by per claim, the insured have to bear a deductible for every claim, no matter when it is made.

• Co-insurance

Some policies require you to pay a certain percentage of the excess amount even after the deductible has been met.

Limits

• Benefits

Most policies put a cap on how much can be claimed. By duration, the amount can be limited based on per lifetime or per year. Most insurers add in some event limits to the duration limits as well. Event limits set the maximum amount payable for a certain illness or medical category. This can include per day room and board limits and per claim surgical benefits.

• Geographical

Insurance policies may be terminated after the insured is away from the home country for more than a specified period of around six months. What some other insurers do is that they allow renewals at a higher premium or reimburse overseas treatments based on home country’s customary charges.

• Age

There is usually a minimum and maximum age limit for entry. An insurer may also choose to extend coverage up to 99 years old. For children insured under parent’s policy, the limit is usually set at the age where he or she completes the tertiary education.

Waiting period

A waiting period is commonly imposed by insurers to prevent abuse of policies. To avoid people signing up for policies without declaringtheir existing illnesses or cancelling their policy once a claim is made, some policies only activate their coverage after a specified period. The insurer is not liable for claims filed in the waiting period – though, there can sometimes, be some exceptions offered.

Premiums

Premiums rate usually increases by age group and is locked in based on the age when the insured has signed. It can be paid in monthly, quarterly, half-yearly or yearly instalments.

Fine prints

The worst case scenariois to realise that you are not eligible for a claim. Always take note how the terms are defined, even for your policy riders. For example, some insurers do not regard Stage 0 of cancer or carcinoma in situ as “critical illness”. If you can do menial tasks, you may not be “unable to work”. Some entitlements, especially cash payouts, only kick in after a minimum length of time and cease when they reach a cap. These include situations such as hospitalisation and inability to work.

Ask your insurance agent for a list of optional enhancements and make sure you have got everything you need. Know what are not included, and pay the extra if you have to.