Take A Policy Early, Declare Illnesses, And Stay Well-Covered, Says Tapan Singhel

I think the biggest myth in health or any other insurance is that Insurance companies don’t pay claims, which I find fascinating because if I look at the data, a huge amount of claims are getting paid. When I look at the issue in terms of the rejection or the grievance ratio, it is still among the least in the entire financial world or the e-commerce or places like that. But still, the feeling is there and probably because of the process in which the claim gets paid. It is what may have created this friction and that is what has to be worked upon. But I can say it confidently that a huge amount of claims get paid. In COVID time, 40,000 crore claims were paid for COVID only and the industry stood by it. I think across the world, companies said COVID is not covered, but in India, the industry paid all the claims and did not ask the government for any support. So, that is the biggest myth for me to begin with.

I think you should understand the kind of cover you have. If you have an out-patient department (OPD) cover, your doctor consultation is covered. So, there are different kinds of covers available. Some are specific cover for critical illnesses and there are general cover that would cover everything. These are all defined. So, if you have surgery for cataract or if dialysis is happening which does not require 24-hour hospitalisation, yet the claims are paid. So, fundamentally, if I look at the health space, there are close to a minimum of 40 kinds of covers that are available. The only request I have for the consumers is that when you are buying something, read the document.

When you buy a shirt or a piece of cloth, you go to three stores, look at it, and spend some time figuring it out. If you are buying a vehicle, you research about it. But when you buy insurance, why do you just sign the document? So, there are covers available, even the OPD consultation cover available which would cover illnesses that would not require 24-hour hospitalisation. So, please look for the right cover and be well insured.

There are two things to it. First and foremost, it is a declaration. I think a lot of people feel that if they declare that they have an illness they will not get a cover. Therefore they do not declare at the time of taking the cover. Now, what happens when a claim happens and you have not declared, doctors will write about your medical history, and if it is detected that you had the illness before you took the cover and you have not declared it, then the claim get repudiated. Rightly so, because if a person who contacts an illness and has to undergo surgery, let us say in the next 3-4 months, buys insurance and then goes for surgery, the business (insurance) can’t operate.

But, having said that, if you declare your pre-existing disease, insurance companies underwrite it and give you adequate cover, which would take care of the illness. Say you have diabetes or hypertension, you get a cover on that basis. And if a claim happens, it gets paid gracefully. This is why I have seen a conflict in health insurance and claims only for this part where we have not declared exactly what illnesses do we have. Please do declare (your illness). There is coverage available for different illnesses.

This stage occurs because we take health insurance in the later part of our lives. One of the requests that I have is ‘Buy health insurance when you are very fit’. The premium is insignificant, you actually have no illnesses, and the policy runs for a couple of years. It is a very powerful policy. Anything that happens gets paid without questions. I have not seen any kind of grievance or issue for policies that have matured after a couple of years. The claims (for such policies) get paid very smoothly.   

So, there are two things: please declare your pre-existing disease, insurance companies do underwrite it and you get a cover. At the same time, also ensure that you take a policy at an early age when you are fit so that you don’t get into hassle like this further down in your life when you have the (health) issues coming up.

Yes. There are covers for cancer, cover for diabetes and as I said, the number of covers insurance companies are coming out with is amazing. They are trying to solve each issue as it comes. Before 20 years, a health policy would have looked totally different from a policy designed now. So they are continuously improvising it and constantly coming up with the solutions and I am impressed with the way the industry is moving forward. Five years back, there was no OPD cover, today it is available. So please keep rechecking, relooking, and asking the right questions in terms of what you are looking for.

Let us say we bought a health policy 10 years back and at that time my sum insured was Rs 2 lakh. At that time, it was a good base sum insured because it could cover majority of the illnesses. (But) Health inflation hovers in double-digit numbers every year. So if you do the compounding effect of double-digit health inflation in 10 years, then Rs 2 lakh becomes insignificant in today’s time. But as I said when we are buying a policy, we don’t spend the minimum time asking some questions, we just sign the dotted line and take the policy.

Second, even when you renew the policy, you just send the check and don’t ask the question 'Will this sum insured be relevant for me now with inflation moving up'? Ten years back, our salaries were different, and see it now. See the growing inflation. So, how can the sum insured be adequate which you took ten years back? I would recommend that every year you should increase your sum insured, at least by 10-15 per cent. Or try to increase every three years by 50 per cent or so. With the advancement happening in the medical field, it is getting more and more expensive, compared to what it was a few years ago. When I was young and had a headache, one scolding from my mother would cure my headache but today if a child has a headache an MRI gets done to figure it out. So, it is better to be well covered and have a good sum insured.

I would say, you also don’t require a samosa, a cigarette, or an outing. So what you need to think about is the cost vis-à-vis the impact it has and the way it secures your future. Also when you feel that nothing can go wrong with you, you should go to the hospital and look at the billing counter to see what has gone wrong with what kind of people. Then, these impressions would go down.

As an insurer, I understand the risks. Every day, I see cases that I could not believe could happen. For example, I saw car crashes on the expressway for three nights continuously where the car was parked at the toll and somebody hit it from behind. So if a person thinks I am the safest driving guy, what can go wrong with me? I am driving safely, at the best speed, in the correct lane, and when this person stops the car to pay the toll, then someone comes from behind and bangs and fatalities happen. So, one should never underestimate what can go wrong. One should never think that it can’t happen to me. That’s the first thing I learned in my life after seeing so many cases.

The second thing is when you pay the premium, understand how much it costs. Is it so expensive that you can’t afford? Luckily in India, the premiums are reasonable. The health premium would be equivalent to the meal that you would spend on an evening out with your friends.

Today I am healthy, nothing is wrong with me. But 3-4 years from now, if something goes wrong, the policy is very powerful, everything will be paid through it. That's the third thing.

The fourth is that you do not require any money (in young age for healthcare), which is a very good situation to be in, that you don’t require any claim. But your money is being used for somebody else’s benefit. Do we realise that the premium we pay is actually the claim that gets paid to somebody else? So the premium that you pay gets pooled together to pay the big claim.

The way I look at it is that the premium I pay is used for somebody else’s needs. So, my money is being used for a good cause when I don’t require it (health claim). If I don’t go on an outing with my friends and from that money and buy one health policy, that is how it is utilised for someone else’s benefit. This is the way we look at it.

So, why should we see an insurance policy as something in which we pay money to get something? This is not the case (in insurance). Insurance is where you pay the money and hope that nothing will come to you. If it comes it means something is wrong, I mean why would you want to be in that position?

First and foremost, let me say that when kids spend money, it's not (always) mindless spending. They should have a relished life and they should have experiences. But they should also take care, as we call it for the rainy day if something goes wrong. Earlier, people used to save money. Now we buy insurance to remain protected.

Coming to the corporate job world, if they can guarantee two things, then it is fine. One is that they will always be in the same job and two that the company will always provide health insurance for its employees. If this is guaranteed then you (can) have mental peace. But when you retire, I hope the company is going to take care of the health policy till you are alive after retirement. If that is done, then you don’t require a health insurance policy.

Perhaps, that is primarily with the government servant?

(Even) a lot of government servants and people in government have private health insurance. I tell you why. People quit jobs and join different jobs. They leave and the sum insured that the company is providing is too small. Or when they retire the sum insured is gone but that is the time they require it the most.

Let me tell you that my company provides me a health cover but I have taken a top-up on that. I have taken a critical illness cover, and an OPD cover. So even if I quit the company or the company stops providing me health cover, I already have a substantial amount of health cover which I have been taking for close to 25-27 years. The pre-existing diseases are fully covered now with the base cover of a couple of lakh rupees. So, my recommendation would be, please have your own individual cover on top of what the company is providing and be very well covered. It pays in the long run.

We have this cover for kids who are studying abroad. Most companies figure out the university requirements and on that basis, design the policies. I don’t think the parents should hesitate in buying a cover. Instead, they should check the university’s requirements and that the health cover provided here can meet those requirements. If it is provided, they should submit it to the university and most universities would agree to that. So, they can check with the university, if they agree then they would have good cover. We are already servicing so many claims across the world. It is not a concern and Indian insurance companies are able to cater to that. The only thing that has to be done is, please check with the university, see their requirements, and check with the policy if it covers that. If yes, it is perfectly fine. This is what needs to be checked.

One (should) have a lot of belief in the insurance industry. The data is available on the regulatory websites, in the public domain. The industry has a combined ratio of 118, which actually means that they are paying Rs 118 to Rs 100 they are getting. They are really paying claims. They pay it very well. The problem in insurance comes when you want to buy a house policy at a time when your house is on fire. It gets difficult or if you have bought a policy, the claim gets into an issue.

So, it is always good to buy a policy (before the issue occurs), be well-covered, and make proper declaration when buying it. As I mentioned even if you have illnesses, please mention that and once you have that, it becomes a very powerful policy for you. I have not seen any claim disputes happening in matured policies and in policies where people have been well covered. On the contrary, I have seen people who are not covered, taking loans. I have seen people who are not covered go below the poverty line. I have seen disasters happening to people who didn’t have insurance. So, my only recommendation, from all the years of experience I have, is take a good health cover, be covered, and take it at your level. Don’t worry whether your company has or doesn’t have it. Take it now. It doesn’t cost you much money.