Insurance review – A policy designed for younger policyholders

In our articles on health insurance, we have highlighted the importance of hospitalisation insurance covers to shield your finances from health emergencies. In January, we followed this up with Prime Health Insurance – our recommended list of health insurance policies. These recommendations span a variety of requirements that you may have for your health insurance. 

We now kick off more detailed reviews of the products we recommend. 

We’re starting this series with Star Health Young Star Insurance Policy. This is a policy that’s very suitable if you are a young person who’s either single, or just married or in the early stages of your career. Here’s more on what makes it a good policy for younger policyholders.

Policy basics

Star Health Young Star policy is available for people from ages 18-40, with lifetime renewability as well as the flexibility to include their spouse and children at a later date. Dependent children aged from 91 days to 25 years can be covered. Once the child reaches 25 years of age, a separate policy with continuing benefits is issued. 

The policy is available both as an individual and floater plan. The policy can cover as many as 5 people under the floater plan, which should be sufficient for a fairly large nuclear family. 

The waiting period for pre-existing diseases is just 1 year. The range of sum insured is fairly wide, from Rs 5 lakh all the way up to Rs 1 crore (for the individual plan, Rs 3 lakh to Rs 1 crore). 

The policy has 2 plans – Silver and Gold, with the Gold plan adding on maternity and hospital cash benefits. The policy term can be 1 year, 2 years, or 3 years. On premium payment, quarterly and half-yearly options are available. It covers single private AC rooms. 

The policy takes care of contingencies beyond in-patient treatment too. Day-care treatments are covered and 60 days of pre-hospitalisation and 90 days of post-hospitalisation expenses can be claimed. Annual health checkups – up to a specified limit – can be claimed, provided this is done at a networked facility. 

25% additional sum insured, subject to a maximum of Rs 10 lakh is available for road traffic accidents.

Why buy

Of the features explained above, a few stand out that make Star Health Young Star a good policy for single, younger policyholders.

• Short waiting periods: This policy has the lowest waiting period for coverage of pre-existing ailments in the market. It sets the waiting period at 1 year instead of the 3-4 years that is the norm. This makes the policy more quickly useful to you, if you require any treatment for your existing health conditions. 
• Reasonable premiums: Star Health Young Star has premiums that are quite reasonable compared to competing plans. Consider a 25 and 35 year old male – here, an individual cover of Rs 5 lakh costs Rs 5,375 and Rs 5,912. This compares well against the Rs 8,370 that it would cost in the HDFC Ergo Optima Restore, or even the Rs 7393 and Rs 8046 it would take in the ICICI Lombard Complete Health Insurance Plan Health Shield. Extending this out to a floater policy for a family of four with both adults at 35 years old, the Star Health Young Star’s premium works out to Rs 13,900, lower than the Rs 26642 for HDFC Ergo plan and Rs 19164 for the ICICI Lombard plan.
• Friendly features: The policy has features that make it adaptable, which is among the reasons why it suits younger folks who may see life situations change over the years. If your status changes from single to married or you have children, you can opt for mid term inclusion of your family members into the policy without waiting until the next renewal. It allows 100% restoration of the sum insured for illnesses for which claim was not made in the policy period. The no-claim bonus of 20% of the basic sum insured for every claim-free year, subject to a maximum of 100% of the basic sum insured, is attractive. 
• Insurer strength: Star Health and Allied Insurance is the largest private health insurance provider in India, with a claims settlement ratio of 83.9% based on number of claims and 85% based on value (going by the latest quarterly public disclosures). This holds well compared to the 89.7% and 72% for average across players. This indicates that the insurer has a better record than peers in settling the claims it receives besides settling a higher quantum of the claims made (to better understand these metrics, see this article).

The minuses

On the flip side, some conditions detract from the attractiveness of the policy.

• The policy covers treatment at a single private AC room. If you opt for a more expensive room, pro-rata reimbursement of all expenses will apply. That is, all expenses even apart from room rent will be only partially settled by the policy, based on the room rent. For example, say you’ve opted for a deluxe room at a hospital at a room rent of Rs 10,000 per day for a procedure and the total bill amount for the procedure was Rs 1,00,000. Now, let’s say that the rent for a single private AC room at the hospital was only Rs 6,000 per day. In such a case, the policy may cap the total reimbursement at Rs 60,000 – the same proportion as the sub-limit bears to the actual cost of the room.
• The policy has sub-limits on payments towards select treatments/procedures – i.e., the full amount of such treatments will not be borne by the policy. These treatments include those such as uterine artery embolization, balloon sinuplasty, and robotic surgeries. See page 4 of the prospectus for more details.
• There are permanent exclusions under the policy towards treatments for obesity/ weight control, cosmetic or plastic surgery, treatment because of participation in hazardous or adventure sports, correcting refractive error, treatment of sterility and infertility, etc. To see the full list of exclusions, see page 5 of the prospectus.
• The maternity cover and hospital cash benefits, which are part of the Gold plan, still come with strings attached. The maternity cover is capped at Rs 30,000 with a waiting period of 3 years – a level that is unlikely to be sufficient in most cases. Further, this can be availed only 2 times in a lifetime with a waiting period of 2 years applicable once the first claim is made. The hospital cash benefit of Rs 1,000/day is payable only for 7 days per hospitalisation or 14 days in a year. This can be claimed only from the second day of hospitalisation.

Final take

Star Health Young Star Insurance policy is a good option for single younger policyholders. To make the most of it, we suggest: 

• Opt for the Silver plan as we don’t see significant value addition in the Gold Plan. 
• If in your 20s, start with a Rs 5 lakh sum assured, if in reasonably good health and plan to top up the cover later. 
• Lock into the policy for a 3 year term as that can fetch you a discount of 6.5% on premiums.
• Online purchases will get you a 5 % discount but weigh the direct purchase against the convenience of having an agent to help you process the claim during hospitalisation.