Buying health insurance is one of the smartest financial decisions you can make. It protects you against rising medical costs and ensures that your savings are not wiped out in case of an emergency. However, many people purchase policies in a hurry—without understanding the terms, benefits, and limitations—and end up with inadequate coverage or claim rejections.
To help you make a well-informed choice, here are the top 5 common mistakes people make while buying health insurance and how you can avoid them.
1. Choosing a Low Coverage Amount
The Mistake:
Many people opt for low coverage just to reduce their premium costs. For example, they buy a policy with ₹2–3 lakhs of coverage, which may have been sufficient 10 years ago but is nowhere close to today’s medical expenses. A single hospitalization for surgery can cost ₹5–10 lakhs in private hospitals.
How to Avoid It:
Always consider inflation in medical costs while choosing the coverage amount. A good thumb rule is to buy coverage worth at least 10–12 times your annual income or enough to cover major treatments comfortably.
2. Ignoring Pre-Existing Disease Clauses
The Mistake:
People often overlook the waiting period for pre-existing conditions such as diabetes, hypertension, or asthma. When a claim arises during the waiting period, it gets rejected—leading to frustration.
How to Avoid It:
Check the waiting period clause before buying. If you have pre-existing conditions, look for plans with shorter waiting periods or policies specifically designed for such health issues.
3. Not Checking the Network Hospitals
The Mistake:
Cashless claims work only if you are admitted to a hospital that is part of your insurer’s network. Many buyers ignore this list, only to face issues during emergencies.
How to Avoid It:
Before finalizing a policy, check the network hospital list in your city. Having reputed hospitals nearby in the insurer’s network ensures smoother claim processing and better healthcare options.
4. Overlooking Sub-Limits and Exclusions
The Mistake:
Every health insurance policy has sub-limits (like room rent cap, ambulance charges, or specific treatment limits) and exclusions (treatments not covered). If you don’t review these, you might end up paying from your own pocket despite being insured.
How to Avoid It:
Read the policy wordings carefully. Avoid plans with too many restrictions on room rent or treatment costs. Look for comprehensive policies with minimal exclusions.
5. Buying Only for Tax Benefits
The Mistake:
Some people buy health insurance just to save tax under Section 80D, without considering whether the coverage is actually sufficient. They treat it as a tax-saving tool instead of a health protection plan.
How to Avoid It:
Tax saving is just an additional benefit of health insurance. The primary goal should always be financial protection against medical expenses. Choose a policy based on coverage, features, and claim settlement ratio—not just for tax relief.
Final Thoughts
Health insurance is not just another financial product—it’s a shield for your health and savings. Avoiding these common mistakes will help you choose the right policy that actually works in times of need.