Things to Check Before Buying Any Insurance Policy

Buying an insurance policy takes 5 minutes online, but verifying whether that policy will actually pay out your claim when a crisis strikes takes careful evaluation. Every insurance contract is filled with complex legal clauses, sub-limits, and waiting period disclosures that buyers often ignore until it's too late.

To ensure your claim gets approved smoothly, run every health and term insurance policy through this 7-Point Checklist before making a payment.

The 7-Point Pre-Purchase Insurance Checklist

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|                    THE PRE-PURCHASE CHECKLIST                         |
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| 1. Claim Settlement Ratio (CSR) & Amount Settlement Ratio (ASR)       |
| 2. Room Rent Capping & Proportionate Deductions                       |
| 3. Pre-Existing Disease (PED) Waiting Periods                         |
| 4. Co-Payment & Deductible Clauses                                    |
| 5. Cashless Hospital Network Size                                     |
| 6. Disease Sub-Limits & Day Care Cover                                |
| 7. Inclusions, Exclusions & Medical Disclosures                       |
+-----------------------------------------------------------------------+

1. Claim Settlement Ratio (CSR) vs. Amount Settlement Ratio (ASR)

• CSR (Claim Settlement Ratio): Percentage of total claims paid out by the insurer out of total claims received. Target: > 98% for Term, > 95% for Health.
• ASR (Amount Settlement Ratio): Percentage of total claim money settled compared to claimed amount. A high CSR with a low ASR means the insurer settles small claims but rejects large high-value claims!

Insurers to Select: High CSR (> 98%) AND High ASR (> 92%)

2. Room Rent Capping and Proportionate Deductions

This is the single biggest trap in health insurance policies:

• If your policy caps room rent at 1% of sum insured (e.g. ₹5,000/day for a ₹5L policy), and you stay in an ICU/Private room costing ₹10,000/day, the insurer will deduct 50% from your ENTIRE hospital bill (including surgeon fees, operation theater charges, and nursing fees)!
• Golden Rule: Buy policies with NO ROOM RENT CAPPING or "Single Private A/C Room" flexibility.

3. Pre-Existing Disease (PED) Waiting Period

If you have pre-existing ailments (like thyroid, hypertension, or asthma):

• Check how long you must wait before the policy covers treatment for these conditions.
• Standard waiting periods range from 1 to 4 years. Choose policies with 1 to 2 year PED waiting options or buy a rider to reduce the waiting window.

4. Co-Payment Clauses

Co-payment mandates that you pay a fixed percentage (e.g., 10% to 20%) of every claim out of your own pocket.

Co-Pay Status	Impact on Claim of ₹5,00,000	Out of Pocket Expense for You
0% Co-Pay	Insurer pays ₹5,00,000	₹0
20% Co-Pay	Insurer pays ₹4,00,000	₹1,00,000

Avoid co-pay policies unless buying health cover specifically for senior citizens aged 65+ where co-pay is mandatory.

5. Cashless Network Hospitals in Your Locality

Check the insurer's network hospital directory:

• Are top multi-specialty hospitals near your residence and workplace included in their Cashless Network list?
• Cashless hospitalization saves you from arranging lakhs of rupees upfront during emergency admissions.

6. Day Care Treatment Coverage

Modern medical advancements allow many surgeries (cataract, chemotherapy, dialysis, appendectomy) to be completed in under 24 hours without an overnight hospital stay. Ensure your policy explicitly covers all Day Care Procedures.

7. Medical History Disclosure (Section 45 Protection)

                       PROPER DISCLOSURE WORKFLOW
                                    |
   Disclose past surgeries, family illnesses, smoking/alcohol habits
                                    |
   Insurer conducts medical tele-call / health checkup
                                    |
   Policy issued with full disclosure on record
                                    |
   3 Years Completed under Policy -> Section 45 Kicks In
   (Insurer CANNOT contest or reject claim except for gross fraud!)

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Never buy an insurance policy based solely on sales pitches or promotional discounts. Inspect the room rent capping, co-pay clauses, and claim settlement ratios carefully to ensure your policy protects your family when you need it most.