Why your claims are always less than your sum insured?

So, tell me why your claims are always less than your sum insured.

Most of the people might wondering why I have to know this and some of you might still thinking what is the reason, right!

Let me answer for you, and the reason is “Insurance companies has to make profits right!”

Yes, you read it right, that is the reason my friend.

Hey hey, I’m just kidding here.

The real reason is while choosing the insurance plan we have made a small mistake and that is “Room Rent

Yes, the villain in this story is Room Rent.

Let me explain you how in the following para,

Insurance plans normally comes with a limit on room rent and ICU's, which is generally in the range of 1% to 2% of sum insured.

Here is how room rent limit works:

A typical room rent for a private ward in any of the hi-fi hospitals like manipal or fortis in a cities like Bangalore or Mumbai will be somewhere in between ₹ 8,000 – ₹ 12,000.

So, now the question is so what, correct. Here is the catch my friend!

Our claims are directly proportional to our Villain ie; Room Rent

Let’s say our friend Mr. Chintu got hospitalized for 5 days, and his per day room rent is ₹8,000, and his total hospital bill is ₹2 lakh’s (i.e. ₹40,000 for room rent, and ₹1.6 lakh’s for the surgery and other medical expenses).

Total Hospitalization charges

Let’s say our Chintu have set up a health insurance that has sum insured (SI) as ₹2 lakh’s, and the room rent submit is set as 1% of SI, i.e. ₹ 2,000 per day.

The poor boy Chintu would meaningfully think that he would need to pay ₹ 6,000/day (₹8000 — ₹ 2000) for room rent, i.e. ₹ 30,000 for 5 days, out of his pocket, and the rest ₹ 1.7 lakh’s will be covered by the insurance company.

But most of us just like Mr. Chintu, don’t know that room rent and ICU limits come with proportionate deduction.

Proportionate deduction comes into picture when you pick a room with tariff which is above the allowed room rent limit in your policy.

It means that the insurance company will cover you for the associated medical expenses in proportion to room rent limit to actual rent paid.

I know that you are not 100% clear on this, lets look at the below picture;

Claim Calculation

So, they pay only 25% on all the costs incurred except the medicine charges. And eventually not only Mr. Chintu even we also end up burning our pockets in this scenario.

Obvious Question is;

How to get rid of this?

Don’t worry, I have the solution my friend!

Simple, just follow these steps :

  1. If you want to take treatment in hi-fi hospitals like our Mr. Chintu then ask your insurer for the limit of 3% – 4%.
  2. If your insurer say no to the above point then increase the sum insured (SI) to ₹ 5 lakh’s from ₹ 2 lakh’s. or
  3. If you are just like me, who choose a normal hospital then we can go with the ₹ 2 lakh’s because in india room rent per day ranges somewhere in between ₹ 2,000 – ₹ 5,000. So we are sorted but for safer side, its better to have ₹ 3 lakh’s SI.

That’s it from now on wards we are going to win over the insurer as far as Claims are concerned.

Do let me know your thoughts and experiences, I’ll happy to know few 🙂

Till then, this is Rushi signing off!

Leave a Comment