These 10 Health Insurance Myths Could Cost You Lakhs — Are You Falling for Them?

Thanks to the ever-increasing costs of medical treatments across the globe, and especially in India, obtaining health insurance has become a necessity. Unfortunately, the large number of health insurance myths that people fall victim to leads to common insurance mistakes and significant financial losses. These health policy myths are so dangerous that individuals can experience a medical emergency and end up having to pay a substantial amount out of pocket. 

This article will examine 10 common false beliefs, discuss the reasons insurance claims are denied, and provide practical guidance on purchasing health insurance. This will help you become as informed as possible and assist you in avoiding most pitfalls, as well as ensure adequate coverage for your family.

In the past few years, the evolution of digital technology has improved the access and quality of services offered and enhanced the quality of services provided to the Insurance Sector in India. Government initiatives such as Ayushman Bharat have also contributed to India's Healthcare Sector. 

Despite the advancements in technology and government initiatives, there are still a large number of misconceptions and myths regarding health insurance. These myths are often perpetuated through word of mouth as well as outdated sources. In the quarterly reports released by the Insurance Regulatory and Development Authority of India (IRDAI), data shows yearly claim rejections of 10-15%, and the average Indian citizen lacks the knowledge needed to understand health insurance policies. 

It is crucial to comprehend the myths surrounding health insurance, as it can ultimately determine how secure your finances are.

 

 

10 myths about health insurance in India

 

Myth 1: Health Insurance Is For Old People

One of the most prevalent myths is that coverage is only for the elderly. Young people often think, "I am young and physically fit, and I don't need health insurance." This kind of thinking is flawed. Accidents, lifestyle-related diseases such as diabetes, and even pandemics have shown that they can affect people of all ages.

The truth is that anyone can be a victim of a medical emergency. For example, a 30-year-old might suffer a sports injury and require hospitalisation, which can easily cost anywhere between ₹2-5 lakhs. This poses a significant financial burden without insurance. Another common insurance mistake is waiting too long to purchase a policy. 

In India, insurance companies do not sell policies after the age of 65. Beyond that age, buyers have to acquire a new policy, which will come with higher premiums and age-related coverage exclusion periods. According to the IRDAI, age-related exclusions imply that every five years in a span of ten years, there will be a 10-20% increase in the applicable premium.

Tip from our buying health insurance guide: Always start early. For future-proofing your health insurance policy, choose lifelong renewability options and riders, such as critical illness riders.  

Myth 2: I Don't Need Insurance If I'm Healthy 

This health policy myth is about assuming that perfect health is a good reason not get insurance. Some people say, “I eat well and exercise,” while ignoring all the risks that are beyond their control, such as infections that could occur or hereditary conditions.  

A simple dengue treatment could cost you between 50,000 and 100,000 rupees. Delaying your insurance means losing the benefits of no-claim bonuses and having to wait for periods for pre-existing conditions.  

Not disclosing that you are a smoker is one of the reasons your insurance claim can be denied. Don't do it. Just be honest when you are applying for the insurance. Choose plans that can be used for OPD (outpatient department) as these plans can be used for regular health checkups and will turn the insurance into a health preventative tool.  

Myth 3: Insurance from My Employer is Enough  

It is a common insurance mistake to believe that relying on group insurance from work is enough. Many of these policies come with a cap, such as a 5 lakh sum insured, which is not enough for a large surgery.

What is the catch? If you lose your job, your coverage ends, causing you to become vulnerable during a period of job transition. Considering the current situation of increasing unemployment in India, the situation can be very expensive. A heart bypass surgery can cost up to ten lakh rupees.

When switching to personal plans, you should also consider continuity. In our buying health insurance guide, we recommend checking the sum insured value (which is generally 10-15 times your annual income) and the network hospitals for cashless claims.

Keep in mind, group plans typically do not cover your family, so be sure to use individual policies for added coverage.

Myth 4: Cheaper Premiums Equals Better Value

It is very normal to look for bargains; however, choosing the option with the lowest premium is a health insurance myth that buyers in India tend to regret. For a low-cost plan, you might find that there are limited features like room rent and co-payments, resulting in increased out-of-pocket expenses.

Consider this: If the policy states that there is a 20% co-pay, that means you will pay 20,000 rupees if the hospital bill is 100,000 rupees. Additionally, if there are hidden limits for cataract surgery, you might find that they will only pay part of the claim.

Policies are often subject to a claim denial because they exceed the policy limits set. Always pay attention to the details.

As a result, guides suggest that you use comparison sites like Policybazaar if you intend to assess value rather than simply price. No-claim bonuses should also be accounted for as they may decrease the premium to as low as 50% in the future.

Myth 5: Some Pre-Existing Conditions Will Never Be Covered

Many potential insureds fail to declare their medical history to the insurer because of the belief that pre-existing conditions (PED) such as high blood pressure, will not be covered. This perception is inaccurate. Most insurance policies cover PEDs after the policyholder serves a waiting period of 2 to 4 years. 

While some will choose to remain covered after serving the waiting period, a very large percentage of policyholders will choose to use the medical services offered by the insurance policy. This means that it is very important to declare PEDs to the insurer. This is because not disclosing a medical history is one of the top reasons for being denied a medical claim. 

It is estimated that 25% of insurance claims are denied for this reason, according to the IRDAI. Untreated medical conditions continue to be a cause for increasing medical expenses. An untreated case of diabetes can cost up to ₹50,000 a year to manage without insurance.  

From the health insurance buying guide, disclose your medical history to the insurance policy and choose policies that have shorter waiting periods for covering PEDs.

 

 

Myth 6: Cashless Treatment Means Cashless Everything

Believing that a cashless treatment means that they will incur no costs is also a misconception that many people have. It is also common for people to have an added expense because of the use of non-medical items such as gloves, syringes, and other medical supplies. The use of non-medical items is also a reason for people to incur an added expense from being in a particular hospital room class.

In India, some people have to face gaps in the insurance system in order to use cashless. This means that hospital-type gaps are available only at cashless network hospitals, while non-cashless hospitals only pay their share after a claim.

It is common for people to skimp on their health insurance plans because they underestimate the claim rejection triggers of insurance contracts. One such example is entering a hospital that is not approved by the insurance company.

To avoid hospital stay level class costs, be sure to check the hospital lists and choose high room class level insurance policies.

Myth 7: You Can Claim Any Medical Expense

Spa treatments, dental surgeries (unless they are add-ons), and experimental treatments fall under the category of non-eligible treatments; not every treatment can be claimed. This health insurance myth in India leads to a lot of confusion and surprises.

For example, weight-loss surgery is not eligible (unless it is an affirmative medical claim), and you are unlikely to be reimbursed for any over-the-counter medications!

An example of neglecting the exclusions is a common insurance mistake that can lead to a claim denial. Statistically, 15% of the insurance industry is comprised of claims that are denied because the expense was not eligible.

Tip: Check the exclusions list very thoroughly and keep in mind that you can add riders for dental, maternity, or ayurvedic treatments.

Myth 8: Buying Health Insurance Online is Risky

There is doubt about making purchases online, and people often fear that they will not be safe or that the seller will not be there to support them. However, there is regulation of online purchases because of the IRDAI, and in fact, they are cheaper because you do not have to pay agent commissions.

This myth is an example of an outdated view of the world, as most of the secure and trustworthy online platforms also offer a 15-day free-look period. There is a high chance that an offline purchase will result in health policy mis-selling. Online, you have the ability to view and compare information.

Step-by-step buying health insurance guide: Use sites you can trust, read reviews, and to avoid any potential scams, verify that the policy is genuine via the IRDAI portal.

Myth 9: You Don't Need to Disclose Full Medical History

While it is tempting to think that you pay less in insurance premiums if you have allergies and do not disclose them, this strategy can easily backfire. The insurer will look into claims that are made, and rejections are common if information is not disclosed.

A concealed thyroid diagnosis could result in a cancer claim loss of up to ₹2 lakh. With fraud checks to deny claims using Artificial Intelligence, this tops insurance claim rejection reasons. Policies also now offer waivers for some pre-existing conditions. Disclose and document everything. Crossing your fingers won’t do.

Myth 10: Insurance Covers All Alternative Treatments

Because interest in Ayurveda and homeopathy is picking up, it is assumed that coverage includes this. However, standard plans are focused on allopathy and in order to cover alternatives, specific riders are required.

Without these, covering yogic or naturopathic retreats will result in your claim being denied to the tune of thousands. Such a claim is most definitely a misuse of policy wording. Supports provided by the IRDAI are explicitly limited to the systems that are covered.

If it is important to you to cover holistic health, choose Star Health, which offers AYUSH benefits of up to ₹50,000.

How to Avoid These Myths: A Quick Buying Health Insurance Guide

Having debunked these health insurance myths in India, here is a list of things you can do: 

1. Identify Needs: Based on the size of your family, the city you live in (metros are costlier), and the rate of inflation (10 to 15% yearly), calculate the sum insured and add to it.

2. Compare Plans: When using aggregators, look at waiting periods, exclusions, and claim settlement ratios, ideally over 95%.

3. Read Fine Print: Understand co-pays, sub-limits, and network hospitals to avoid explanations for insurance claim rejections.

4. Buy Early: Lock in lower premiums and build no-claim bonuses.

5. Seek Expert Help: You may consult certified advisors; however, do your own verification.

6. Renew Timely: If you let your policy lapse, it will reset your waiting periods.

By following these tips, you will avoid many common mistakes when buying health insurance and have peace of mind financially.

 

 

Conclusion: Myths Shouldn't Cost You Money

These 10 myths about health insurance can cost you money, even though health insurance protects you from medical emergencies. With the health policy myths, like PED exclusions, and the practical problems with the claims process, knowing the truth is essential. With healthcare costs rising in India by 14% every year, the right insurance plan can save you a lot of money.

Review your policy, disclose everything accurately, choose the right insurance plan, and do it quickly. If you don’t know which plan to choose, you can start with a free quote online. With health insurance, it's all about the right choice, and it turns your insurance costs into an investment.

DISCLAIMER: This blog is NOT any buy or sell recommendation. No investment or trading advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.