How to Compare Health Insurance Policies

Health insurance policies can look alike at first glance. Two plans with the same sum insured and similar premiums can pay very different amounts on the same hospital bill, because of terms buried in the policy wording. Comparing policies well means looking past the headline numbers to the conditions that decide what a claim actually pays.

This guide explains those conditions. It does not recommend any insurer or plan.

First, understand the basic structures

• Individual policies cover one person with their own sum insured.
• Family floater policies share one sum insured across family members. They are usually cheaper, but one large claim can use up cover for everyone that year.
• Indemnity policies, the most common type, reimburse actual hospital expenses up to the sum insured.
• Fixed-benefit policies, such as many critical illness plans, pay a lump sum on diagnosis of a listed condition, regardless of the bill.
• Top-up and super top-up policies pay only after expenses cross a threshold called the deductible. A top-up applies the deductible to each claim; a super top-up applies it to the total claims in a policy year. They can be a cost-effective way to increase cover, often alongside an employer or base policy.

The terms that decide your payout

Sum insured

The maximum the insurer will pay in a policy year. When choosing, think about the cost of treatment at the hospitals you would realistically use, the number of people covered, and the rising cost of medical care over time.

Room rent limits

Some policies cap the room rent they will pay, for example as a percentage of the sum insured per day, or restrict you to a certain room category. If you choose a more expensive room, many policies reduce not only the room charge but also associated charges such as doctor fees and nursing in proportion. This is known as proportionate deduction, and it is one of the most common causes of unexpectedly low claim payouts.

Co-payment

A co-payment means you pay a fixed percentage of every claim yourself, for example 10% or 20%. Co-payments are common in senior citizen plans and sometimes apply to treatment in certain cities or hospitals.

Sub-limits

Some policies cap payments for specific treatments or procedures, such as cataract surgery or joint replacement, below the overall sum insured.

Waiting periods

• Initial waiting period: typically the first 30 days, during which only accident-related claims are covered.
• Specific disease waiting period: certain listed conditions or procedures are covered only after a set period.
• Pre-existing disease (PED) waiting period: conditions you had before buying the policy are covered only after a waiting period. IRDAI sets a maximum, and some insurers offer shorter periods for a higher premium.
• Maternity waiting period, if maternity is covered at all.

Waiting periods are a key reason to buy health insurance early, while you are healthy, and to keep renewing without a break.

A worked example: room rent limits vs co-payment

Other features to compare

• Pre- and post-hospitalisation cover: expenses before admission and after discharge, such as tests and medicines, for a set number of days.
• Day-care procedures: treatments that do not require 24-hour admission.
• Restoration or recharge benefit: refills the sum insured after it is used up during a year. Check whether it applies to the same illness and the same person.
• No-claim bonus: an increase in sum insured, or a discount, for claim-free years.
• AYUSH treatment, domiciliary treatment, OPD cover and maternity, if they matter to you.
• Lifetime renewability. Policies are generally renewable for life, and insurers cannot refuse renewal merely because you made claims, except in cases such as fraud or non-disclosure.
• Exclusions: what the policy never covers. Read the list.

Cashless claims and network hospitals

At a network hospital, the insurer or its third-party administrator (TPA) can settle the bill directly, so you do not have to pay upfront and claim reimbursement later. Check that hospitals you would actually use, near your home and those of family members covered, are in the network. For non-network hospitals, you usually pay first and then file a reimbursement claim with documents.

Claim settlement data

Insurers publish data such as the claim settlement ratio (the share of claims settled) and the incurred claims ratio (claims paid compared with premiums earned) in their public disclosures, and IRDAI publishes industry data in its annual reports. Use these as one input, and read them carefully: they cover all policies, not just the one you are considering, and do not show how much of each claim was paid.

Honest disclosure

When you buy a policy, you will be asked about your health history. Disclose all pre-existing conditions, medications and past treatments accurately, even if it increases the premium or adds a waiting period. Non-disclosure can lead to claims being rejected or the policy being cancelled.

Before you buy: read the documents

• The policy wording, which is the legal contract.
• The Customer Information Sheet (CIS), a standard summary of key features and exclusions.
• The prospectus or brochure, which is a marketing summary and not a substitute for the wording.

New policies come with a free-look period after you receive the documents, during which you can cancel if the policy does not suit you, subject to some deductions. Check the number of days in your policy documents.

Portability

If you are unhappy with your insurer, you can port your policy to another insurer at renewal. Porting allows you to carry over credit for waiting periods you have already served, within the earlier sum insured. Apply well before your renewal date and do not let the existing policy lapse.

Tax

Under the old tax regime, premiums paid for health insurance for yourself, your family and your parents can qualify for a deduction, with higher limits for senior citizens. This deduction is not available under the new regime. See basics of income tax in India and check the current limits on the Income Tax Department website.

A comparison checklist

Question	Policy 1	Policy 2
Sum insured and premium
Room rent limit or room category
Co-payment, and when it applies
Sub-limits on specific treatments
Pre-existing disease waiting period
Specific disease waiting period
Pre- and post-hospitalisation days
Restoration benefit and conditions
No-claim bonus
Network hospitals near you
Key exclusions

If a claim is rejected

1. Ask the insurer for the reason in writing, with the policy clause it relies on.
2. Complain to the insurer's grievance redressal officer.
3. If unresolved, register a complaint on IRDAI's Bima Bharosa (opens in a new tab) portal.
4. You can also approach the Insurance Ombudsman through the Council for Insurance Ombudsmen (opens in a new tab), within the applicable time limits.