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-   -   Medical insurance vs self-insurance with top-up plan (https://www.team-bhp.com/forum/shifting-gears/285493-medical-insurance-vs-self-insurance-top-up-plan.html)

I kind of agree with the 10Lakh Health Cover. Why would somebody having 20Crores corpus want to rely on a third party in the time of crisis. I have personally had a harrowing time dealing with an insurance company with numerous forms to be filled and request for additional documents, doctors signatures, etc. only to finally approve 60% of the actual expenses / claim amount.

Honestly, i feel it was just not worth it and only added to the stress, contrary to what is actually expected of a Health Cover. I would rather have a separate SIP or set aside a sum for such emergencies.

Better would be to have a top up cover (25/50 lac) with an attachment/deductible of 10 lacs which a person with that kind of corpus of even lower can easily afford and you will get this policy at a much lower premium/rate comparatively.

There were lots of discussions around whether it makes sense to move to a Tier-2 or Tier-3 post-retirement. So here is one more input for the decision-making process. This is from today's TOI Print edition (Bengaluru).



This could mean

1) Health costs in Tier2/3 cities are 40% lesser than Mumbai and/or

2) People in Tier-2/3 cities are healthier and have lesser claims, so that insurance companies are still able to be profitable.

Either way, this is a point in favour of living in a Tier-2/3 city post-retirement.

Or it could be read as nobody buying health insurance in Madurai and they want to find solutions to grow their customer base in those small towns.

I found this really weird and towards a slippery slope.
1. Would the insurance company refuse claim if I'm a resident of tier-3 city but had a health scare on a trip to a tier-1 city?
2. I reside in Bangalore but tomorrow get transferred to Delhi. Will I have to file for new charges?
3. Someone resides in a remote Uttarakhand village. Premiums are very low. Due to a health scare, the person has to be now transferred to a specialty hospital to Delhi? What happens now?

Next:
1. Vehicle insurance: In cities with more claims, premiums could be more.
2. Term insurance: Folks residing in tier-1 cities need to pay higher premiums.
...and so on...

I just dislike this. :unhappy

It depends a lot on the Tier-2 town/city. A few of them do offer comparable living options at a lower cost. Lots of them, costs are lower, but you'll also need to do without a lot of things you take for granted in a metro.

I've had surgery at a Tier-2 coastal city. The care was much better and literally at fraction of the cost of a Bangalore hospital. But that is only because of the number of medical colleges and hospitals in this area. I wouldn't risk it in a comparable tier-2 city in some other part of the state.

So, yes, it is certainly possible to move to a smaller city and have a good quality of life at lower costs, but research whatever tier-2, tier-3 place you are considering first. Rent for a year and see before making the move.

One thing I can say for sure though, having been a Bangalore resident all my life (40+ years), and being a frequent visitor to Mumbai - our cities are getting ridiculously expensive and polluted, with the quality of life going down each year. So personally, even though I'm a city boy, born and bred, I don't see myself living in one when I get old.

Some of your hunches are already true.

People residing in different cities/ towns are already categorised under 'Zones' (like Zone 1, 2, 3 etc) by health insurers and the premiums are decided on the basis of Zones. If a non-metro (Say Zone 2) insured wants to get treated at a hospital in Mumbai, they will have to pay some extra percentage (like 20% of total amount) from their pocket which can be termed as co-pay by insurers.

Vehicle insurance already captures your RTO location. Premiums based on your location can very well be a reality soon. More and more cars are now 'connected cars' and they track your driving behaviour. I wouldn't be surprised if insurers start considering this (now) personal data (through a legislation) to arrive at your particular premium. Pay as much as you drive is being already offered by some insurers.:)

The health insurance rates vary from Delhi to Pune too. It's a difference of about 5k for 50L cover.

Delhi's pollution, traffic menace, and high cost of treatments contribute to this. And yes, you need to inform the insurer if you change base location.

Medical Cover - Base Sum Assured can never be over valued. Especially in today’s uncertain times. The Sum Assured should be high. One should not rely solely on top up.

Also it makes best sense to buy Health Insurance early enough in one’s personal capacity and not to blindly rely only on the Company’s Insurance policies. Its best to have both. Use the Corporate one as needed until you can. And then move to your own when you retire.

The reason for my recommending a high sum assured is that at any point, the Insurance Company (as per their own fine print) reserves the right to honour or reject the claim amount which is in excess of the sum assured.

It would be sensible to read the fine print. Also, in my experience, one of the better companies in Health Insurance, and whom one can trust, is Star Health. They helped us consistently in our times of need when my Mother was unwell and even in her last hospitalization before she passed.

Shankar Sir, a top up policy will only trigger at an attachment point decided by the policy holder at the time of buying the policy which could be INR 3 lacs, 5 lacs or even 10 lacs. The basic idea of a top up policy is that it sits above a normal policy which one could have say like an individual policy or for a working individual a corporate policy. The mistake most individuals do is that they will have a corporate policy as well as an individual policy. This could be due to many reasons like to have a safety met incase of loss of job or cover for parents which either the individual or corporate policy never offers. But in reality when one has a medical emergency he/she has to go to through the hassle of informing both the policy companies about the hospitalisation and then the challenges occur because of different terms and conditions and which policy will pay how much.

My personal suggestion is that one should buy a corporate policy if it’s available as it will be always cheaper and will have a wider cover than a personal policy as its a group cover for all the employees of the company and many times the company bares the cost (premium ) for it as well. If you ever come across a person working for TCS ask them how has their experience been or of their colleagues and you will never hear a negative feedback as the Insurance company considers them as an “A” rated client and will go out of the way to settle any claim whether payable or not in record time.

Further, why I recommend people to buy a top up cover is because of the cost factor. Case in point is my father in law who has a 25 lac top cover from Star Health at 11k + annual premium. Just, imagine the premium one will have to pay if you buy 25 lac cover from grounds up for an individual who is in his 60’s. My brother in law has him covered for up to 5 lacs under his corporate policy and that is the attachment point for his top up cover.

I work in the Insurance industry and my own company was providing me with a floater cover for 10 lacs for myself my wife and both my parents for 90k annual premium. I personally being from the industry don’t buy medical or life insurance as I believe in self insurance as I don’t want my family to run from door to door to get back their own money. This decision was taken due to some personal bad experiences despite being in the same field and it did take time to build up a sizeable corpus but I achieved it.

Thanks for sharing. However we are advised always to have a coverage outside of the employer provided insurance.

Interesting to know being in the industry you had bad experience and believing the self insurance is the way forward. I also thinking same due to bad experiences I had in claiming from my employer provided insurance. I do not have any insurance outside other than what's provided by my employer.

While I want to build a corpus for medical expenses, I am not sure what should be the target It's unknown and how to factor multiple times it might be required during later stage of life.

That is too ensure when one changes job he/she is not left without cover as till date only big corporates offer Group Mediclaim Cover and smaller companies may not have this benefit for its employees. Hence, only a top up cover will help in such a scenario as most companies offer a basic cover of 3 to 5 lacs so that is the basic corpus one should have and once that is exhausted the top up cover can be utilised.



Both my parents were hospitalised in 2021 first my father for Covid and then my mother for a urine infection and both were on reimbursement basis where I paid up front and then the insurance company would pay me on submission of documents and that is where I faced multiple issues wherein the company paid me a lesser amount despite all bills being submitted and I had to make multiple submissions to clarify the amount I was claiming. Now, I don’t know how my family would have managed if I was the one who was hospitalised. A headache I don’t want them to experience ever.

Another recent experience is as fresh as last week when my cousin lost her husband who was just 43 years old and was brain dead and the family had to take the hard decision of taking him off the ventilator and donating his organs to help others in need and still the hospital was not releasing his body as Insurance had not given their clearance on the final bill and I had to get my company involved to expedite the process.

On having self insurance for a family of four with elder parents a corpus of 50 lacs to 1 cr is a healthy number to start with. The number is so high keeping in mind where one has to undergo a organ transplant or other major treatment /surgery which will have a long recovery period with hospitalisation.

Hope the above helps.

Thanks for sharing. I have gone through the similar experience and similar thought process of how my family would be able to follow up and fight with the insurance company to get the approvals. It's more of head ache than the benefit during the stressful time.

Thanks for your post. I have been confused about all the points you mentioned in your post! Would be great if you can shed more light on these things.

I have a family floater policy for 10L that I have been maintaining privately. I am not employed at the moment but if I do take up a job in future, what should I do? I don't want to discontinue this policy because the clock will reset and I will have to wait for some years to get cover for some diseases. However, I would prefer a company provided policy as that offers much better customer service and it would be a free employee benefit. My employment is not steady so I can't depend on policy provided by employer as i will have lot of employment gap years.

Someone said if the top up cover is not from the same provider of basic cover, it would be a big hassle. My family floater basic policy is from Oriental but they don't offer any top up cover products. Who according to you offers very good claim experience for top up cover? I have been meaning to buy one but got stuck with analysis-paralysis. Can a policy to be transferred to another provider without losing the benefits of having held the policy for so many years?

Wow. This is a revelation to me. I have been brainwashed to buy health insurance. I am paying 80K annually for a cover of 10L for donkey years. I'm just following the crowd but I often wonder why I'm paying this much for just 10L cover, why not save this and create my own corpus. 10L is not a life-changing amount especially if I'm paying 80K per year. I'm sure there must be a catch. I'm not very smart when it comes to these things. Maybe maintaining a cover for 10L can potentially reimburse 10L medical bills every year for an annual payment of 80K - is that the logic? Could you please share pros and cons of this approach? Thanks.

This is how I understand it. But the catch is, there is no guarantee that the Insurance company will let one renew the policy next year if one has been diagnosed with an issue in the current year.