India is a country that has a majority of its population living in rural areas. Health Insurance in India has very low penetration. The lack of awareness on what Health Insurance is and why it is useful is a leading factor for this small figure. Many people are simply ignorant that Health Insurance can be a life saver in times of illness. With health costs and medical bills constantly on the rise, paying for hospitalization and medical bills out of pocket, can bankrupt a person of low to middle income.
Another reason for low penetration of Health Insurance is the number of frauds and scams plaguing the sector. In this article, we shall look at how customers are scammed while availing a Health Insurance plan and the precautions that can be taken to avoid falling prey to these scams.
Health Insurance, also called Medical Insurance, is taken to cover costs arising out of medical and surgical expenses. There are two ways in which the claim can be made. The insurance company reimburses the holder for the hospital bills or, the insurer directly settles the bills with the hospital.
The different types of Health Insurance available are as follows:
This plan is designed to insure an individual (Holder) against illness and medical expenses up to the limit of the sum insured. The premium payment is directly proportionate to the size of the policy cover.
Family Floater Plans cover the entire family’s medical expenses. Any member of the family under the plan can avail the insurance cover and multiple members can avail cover simultaneously. The total sum assured will be for covering the medical expenses and illnesses of all the members, therefore, the premium amount will also be higher. However, the premium is much lesser than taking individual insurance plans for each member separately.
Knowing the options available while availing Health Insurance is one thing, safeguarding against scams and malpractices that are rampant while buying an Insurance Policy is another. Let us now take a look at some popular methods used by scammers and unscrupulous agents, and how to avoid them.
The most obvious way that people get cheated out of their money is by scammers using them as a target to sell fake Insurance policies. Customers are usually targeted by phone calls, Ads, E-mails and so on. They present fake documents and collect the premium from customers, after which they disappear with the money.
Scammers also pose as legitimate insurance companies and sell non-existent policies to the unsuspecting public. They present well-crafted policies in the name of existing Insurers and sell them to the public. There have been many cases of Insurance houses being approached with claims only to realise that such policies had never been offered by them. The claimant is woken up to the harsh reality that he has been scammed.
Another method that scammers use is to create a sense of urgency in the minds of the target. They make claims saying the offers which have been presented to them will lapse after a few days and the benefits will be lost, if they don’t avail the policy instantly. Customers are enticed into buying policies which they believe are cheap, as they are made to believe that these policies will become costlier in the future because of extra taxes that would be levied on the policies.
Some agents also attract potential targets with promises that Insurance Regulatory and Development Authority (IRDA) is redistributing commission and purchasing a policy will help them receive this commission. Customers avail the policies with the hope of receiving the benefits of insurance along with the commission.
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Whenever a bank, agent or insurance house approaches you, do a thorough research on the company, agent, bank and the product that they are trying to sell. Gathering as much information as possible can save you from falling prey to scams.
Whichever policy is offered, ask the seller to present a hardcopy along with the signature and seal. This can be a powerful reference in the future to use against being cheated.
Sellers want a quick decision to create a sense of urgency and reduce the time you have to do proper research. Never take a decision in a hurry, just because someone is pressurizing you to do so. Ask for at least a week’s time to study and compare the health insurance plan with similar plans in the market.
When you are presented with offers to buy an insurance policy, inform the seller that you will consult an expert or personal financial advisor before making a decision. Knowing that there is an expert involved will discourage any mis-selling.
Hiring a professional financial advisor can seem like a waste of time and money, but the benefit you get far outweighs the cost of hiring him. Agents usually sell high commission products instead of the most suitable ones. A professional advisor can guide and help choose the right policy for your needs.
IRDA is a regulatory body and does not sell any financial products. When you receive calls or ads about any such offers, be careful and understand that it is most likely an attempt at scamming you.
Always ask for the agent’s qualifications and license. Each seller of an Insurance Plan is issued a license by IRDA, and asking for this IRDA license number is a safe practice.