Zerodha's Nithin Kamath shares guide to selecting right health insurance
What's the story
Nithin Kamath, the founder of Zerodha Broking Ltd., has shared his insights on choosing the ideal health insurance plan.
In a recent post on 'X' (formerly Twitter), he warned that "Most Indians are just one hospitalization away from bankruptcy. A good health insurance plan is mandatory."
Kamath's statement highlights the precarious financial situation many Indians face due to unexpected medical expenses.
He recommends specific criteria for selecting a health insurance provider to prioritize transparency and minimize risks.
Insurance selection
Kamath provides guidelines for selecting health insurance
Kamath provided a set of guidelines to help Indians choose the right health insurance plan.
He suggested selecting an insurer with at least five to 10 years of operational experience.
Additionally, he recommended considering companies with a three-year average claim settlement ratio between 80-90%.
The ideal insurer, according to Kamath, should also have an extensive network of 5,000-8,000 hospitals.
Financial stability
Kamath advises on insurer's financial health and complaint volume
Kamath also emphasized the importance of an insurer's financial health, advising Indians to consider companies with an incurred claim ratio of 55-75%.
He reasoned that insurers who can settle claims while still making a profit are beneficial in the long run.
Furthermore, he stressed the need for low complaint volumes over a three-year period as an indicator of quality service.
Policy features
Kamath warns against co-pay feature and room-rent restrictions
In his post, Kamath cautioned against policies with a co-pay feature, which could significantly increase an individual's share of the medical bill over time.
He also advised against policies with room-rent restrictions due to potential high costs if these limits are exceeded.
Additionally, he suggested avoiding policies that impose disease-wise sub-limits on coverage for certain illnesses, as this could lead to out-of-pocket expenses for policyholders.
Plan benefits
Kamath recommends plans with low waiting periods and restoration benefits
Kamath recommended choosing plans with short waiting periods for pre-existing conditions.
He also highlighted the importance of restoration benefits, daycare treatments, and pre and post-hospitalization care that covers at least 30 days before and 60 days after hospitalization.
These features, according to Kamath, can significantly enhance the value of a health insurance plan for policyholders.
Additional coverage
Kamath endorses additional features for comprehensive coverage
Kamath endorsed additional features for comprehensive health insurance coverage.
These include domiciliary cover (at-home care), free annual health check-ups, and loyalty bonuses as well as wellness discounts.
He also advocated for coverage of alternative medicine treatments.
These recommendations aim to provide a holistic approach to health insurance, ensuring that policyholders receive the most extensive protection possible against unforeseen medical expenses.