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Buying Health Insurance in a 2 Tier Vs 3 Tier City: Things To Consider

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Buying a health insurance policy is quite important. By now, you would think everyone is aware of that. Well, not really. About 40% of the country is reportedly not covered by health insurance. A big reason for that is the sheer lack of awareness or prevalent misinformation. While Tier 1 cities have been the focus of the insurance companies, they have started tapping into Tier 2 and Tier 3 cities. But if you are from a non-metro city in India and intend to buy a health insurance plan for your family, you should think hard about the factors you must consider before buying one. Let’s take a closer look at these factors.

Things to consider while buying family health insurance

To ensure you get maximum coverage, here are some factors you must keep in mind while buying family health insurance –

1. Age and health status:

Age and the health status of the family members play a vital role in deciding which healthcare plan you should buy. For instance, if you are 22 years old, and your parents are in their early 50s buy a family plan. But in 7-8 years, you will need to reassess your policy because now your parents are senior citizens and more vulnerable to diseases. In such situations, buying a senior citizen plan for them and a family plan for yourself with your spouse and kids would be a better decision. Also, the cost ofthe premium of a family plan depends on the age of the eldest family member. There’s another caveat: Check out the age limit criterion when buying health insurance coverage. For instance, there are health plans that have the minimum and maximum entry age. Similarly, you wouldn’t want to add a family member with pre-existing diseases who may require frequent hospitalisation and, thus, compromise the health coverage for other members. Buying an individual plan for the former would be a better call.

2. The sum insured:

There can be cases of different family members mentioned in the policy needing hospitalisation in the same policy year. What do you think would be an amount that would sufficiently cover all their medical expenses? This makes the sum insured you choose extremely important. An inadequate sum insured can lead to paying a hefty amount from your pocket.

3. The budget:

As you increase the scope of coverage, you will have to pay a higher premium. The benefit you get and the premium you pay should have a good balance. Paying extra for benefits you don’t need and settling for an inadequate plan to save money are paths you should avoid. Ensure the family health plan is within your budget and customise the benefits to get what you want. There are ways of reducing the premium, like increasing your co-pay, but these aren't highly recommended. However, always ensure you get discounts for a claim-free year by using your no-claim bonus (NBC).

4. Terms and conditions:

The policy document can be exhaustive, but that is no reason not to go through it. Check if there are any additional clauses of room rent capping, co-payment, deductibles, and sub-limits. All these can increase the financial liability of the policyholder and he/she must be fully aware of it. Now, those in their late 40s and 50s can have pre-existing conditions, which makes the waiting period component quite critical. If any hospitalisation results from a pre-existing disease, its expenses won't be met until the waiting period is covered. Therefore, don't forget to read the fine print in your policy.

5. The scope of coverage:

You can buy a standard or comprehensive policy for your family, but know that the scope of coverage can massively differ. Therefore, always thoroughly check the policy's list of inclusions and exclusions. Knowing what's covered and what's not will help you make the right claim requests. Also, you can customise your plan with add-on covers. For instance, add a maternity cover if you plan to have a baby. The other add-on covers are dental, critical illness, OPD charges, domiciliary care, etc.

6. The network of hospitals:

So there are two ways a health insurance policy pays you — cashless and reimbursement. The cashless method is more convenient because the insurance company pays directly to the hospital. But for that, you must visit a hospital that is a part of your insurer's network. Therefore, pick an insurance company that has a wide network of hospitals. Your policy will still cover your expenses in a non-network hospital, but you will have to bear the cost initially and submit bills for reimbursement. This can be tricky if you don't have enough savings.

7. Claim Process:

Opt for an insurer that offers a hassle-free claim process. You can check the insurer’s claim settlement ratio and market reputation to evaluate how transparent its conduct is. Discuss with existing or former customers to know more.

Choosing the right sum insured

While buying a health insurance plan, whether in a tier 2 or tier 3 city, one of the important factors you must consider is choosing the right sum insured. This is the maximum amount you will receive from your insurer in case of a claim. A lower sum insured will have a lower premium, but it will increase your out-of-pocket expenses. Hence, it is recommended by experts that a family of four must have a sum insured of INR 3-5 lakhs to stay financially prepared for any emergency. Again, if any member has a chronic health issue, you might have to consider a higher sum insured. So, choose the right sum insured based on your family's medical needs and your affordability to pay the premium.

Choosing a plan in tier 2 versus tier 3 cities

With renowned insurance companies making their presence felt in smaller towns in India, the customer is spoilt for choice. But apart from the general parameters mentioned above, should a person in a tier 2 city (like Bhopal, Bhubaneswar, and Patna) choose a plan that is different from a person based in a tier 3 city (such as Gwalior, Amritsar, and Agra)? Surprisingly, the answer is yes. By understanding the specific needs and limitations of your city, you can make an informed decision. Choosing the right family health insurance plan in tier 2 and 3 cities requires careful consideration of the following factors as well:

• Due to their rapid urbanisation, the cost of living in a tier 2 city is higher than in a tier 3 city. The same rule applies to the price of medical facilities. Therefore, the sum insured by a family health insurance in a 2 tier city like Jaipur should be higher than someone based in Jodhpur.

• The chances of finding a network hospital in a tier 2 city are higher making it easier for policyholders to avail of cashless treatment. So, people in tier 3 cities should opt for a policy that has their trusted healthcare establishments in the list of network hospitals.

• In tier 2 cities, a policy buyer will find more options in terms of insurers and plans. The competition in the market can be advantageous for them. In tier 3 cities, there could be a handful of companies. With this comes the risk of not improving customer service, leading to a negative image of health insurance.

• One must also look at occupational hazards like exposure to chemicals, chances of specific injuries, etc., when shopping for a healthcare plan.

No matter which city you are based in, everyone has access to high-speed internet. One must use it to do thorough research. Comparing plans can help you buy a good policy at a reasonable premium.

Conclusion

The significance of health insurance has become increasingly evident in the last couple of decades. Buying family health insurance shields your savings against unforeseen medical expenses. However, the choice of plan often varies based on geographical location, and one should not ignore these nuances while buying a family health insurance plan in a 2-tier city and a health insurance plan in a 3-tier city in India.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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