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Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care and health system expenses, among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement.
Continued medical inflation triggers the need for higher sum assured and perhaps even multiple policies. Further, as insurers are usually reluctant to issue policies beyond a certain limit of sum assured (based on certain factors), the insured has no choice but to purchase more than one policy.

A person may also decide to get additional policy/policies if, for instance, he/she wants separate policies for parents, spouse and children, and the policy provided by the employer does not offer sufficient coverage for the entire family.

However, buying multiple Health insurance policies is not where it ends. One must also understand how to use them to their best advantage and correctly follow the procedure of making a claim, failing which one may end up getting a reduced claim settlement amount.

While taking a health insurance policy, the insurance company’s proposal forms have a section asking for disclosure if the person holds any existing policy.

Not disclosing this fact is tantamount to misrepresentation and violation of the health insurance contract’s terms and conditions. Also, in the event of non-disclosure, the insurer's liability is limited to the sum insured only and the insured has to bear the rest of the burden alone.
Contribution clause

The mandatory declaration of holding the other policy/policies is also essential due to the existence of a contribution clause - This clause states that if a person holds more than one health insurance policy, when a claim is made, all insurers share the claim in an equal ratio according to the sums assured under their corresponding policies. The insurer on whom the claim is made, reserves the right to enforce the contribution clause when the insured makes a claim.

For instance, someone has two health insurance policies – one to the tune of Rs. 2 lakhs and another for Rs. 4 lakhs. In this scenario, if a claim for Rs. 1 lakh is made, the insurers will pay Rs. 33,333 (Rs. 2 lakh sum insured policy) and Rs. 66,666 (Rs. 4 lakh sum insured policy) respectively. The policyholder needs to submit all necessary original documents and take a settlement certificate from the first insurer, following which, he can claim the balance with the second insurer with photocopies of the claim documents.

Recently, the claim process has been simplified by the regulator on health insurance by taking off the contribution clause to some extent. The insured previously needed to notify all his/her insurers who would contribute to the claim amount in the ratio of the sum assured. However, with the revised rules, the insured can approach any of the insurers.

If the claim amount overshoots the sum insured of a single policy (after accounting for co-pay and deductibles), the policyholder is free to decide which insurer to approach first. In this scenario, the insurer may apply the contribution clause to settle the claim.

Note: The contribution clause is not applicable where the cover/benefit is fixed in nature or does have any connection with the treatment expenses.
Points to remember

Each claim process typically takes between 30-45 days. For cashless claims, the claim settled by the first insurer will be cashless. When the first health insurance company calculates the claim amount to pay out, it considers deductions and applicable sub-limits against the claim amount, and then settles the claim. The remaining claims are reimbursed later. The second insurer will follow the same process and treat it as though the claim has been originally made. After arriving at the payable claim amount, the amount received from the first insurer will be deducted and the balance will be paid out.

If you have a group cover and an individual cover, claim from your group cover first. This is because group policies do not have complicated clauses, making the claim process faster. Group health covers/plans have lower or no waiting period and they cover pre-existing diseases from day one. The number of claims does not affect future premiums, and if the entire claim is settled through the group cover, then the no claim bonus (NCB) of the individual cover does not get affected on renewal.

In case of two individual health covers, it is wiser to first use the older policy to settle the claim amount, because the waiting period for pre-existing diseases of the older cover reduces/gets exhausted with passing time. Also, when claiming from two policies, first take the policy with applicable sub-limits to understand deductions made under different heads like doctor’s fees, hospital room rent etc. The second insurer then reimburses the balance.

Getting top-up/super top-up plans or increasing the sum assured under the same policy during renewal, saves the problems of claiming from various small covers.

With a super top-up plan, the policyholder can make multiple claims in a year, because it covers all hospitalization expenses and all hospital bills in a policy year. The insurer reimburses the claim amount even when the claim overshoots the deductible limit.

Steps while making multiple claims

Intimate all your health insurance companies at the time of hospitalization

Choose the company from which you will claim first, obtain and fill the claim form

Attach all required original bills and documents

The first insurance company issues a statement mentioning they have received all original documents and have settled the claims

Obtain additional attested copies from the nursing home/hospital in accordance with the number of insurance companies you wish to claim from

After company 1 settles the claim, move to company 2. Get a claim settlement summary and move to the next company

Fill in their claim form, attach the claim settlement summary and all attested copies

Make a covering letter explaining which company you have claimed from and enclose all necessary document details

If you wish to claim from more companies, repeat the  above process with each of these companies

The claim is usually received within a few weeks
The final word

Taking multiple health insurance policies to ensure financial security during medical emergencies is something that most people do. However, it is crucial to understand each policy in detail to know all the terms and conditions, inclusions and exclusions. This significantly expedites the claims process.

As an alternative, try having one health insurance plan with a higher sum assured, instead of having small covers with several different policies. In the latter case, consider consolidating the cover into a single policy or a maximum of two policies. This not only gives adequate cover but also saves time to elaborate paperwork and lengthy claim processes.

It is always advisable that the insured carefully reads all the policy terms and conditions in detail. This increases awareness about all coverages, exclusions, pre-existing disease waiting period etc. and the claim can be based on an informed choice made by the insured.