Guide for Making Claim on Multiple Health Policies

Rising medical costs have made procuring a health insurance plan a must-have for all individuals. But it has also made any sum assured inadequate to meet the financial needs adequately. We also know that a higher sum assured means a higher premium amount. Often the way out is to buy multiple insurance plans from different insurance companies. This helps you get a much higher sum assured with a comparatively lower premium than what you need to pay with a single policy with equivalent sum assured. It also helps you get diverse benefits from different insurers.

However, making claims from multiple policies is slightly tricky. Here, we provide you useful information and a guide to making claims from your multiple policies successfully. Read on!

  • Important Rule

The ground rule of owning multiple health policies is that you need to inform all insurance companies of all the health plans that you have under your name from different insurers along with its attached benefits. This helps you get a hassle-free claim.

The second rule to remember is that you cannot get reimbursed for the same medical expenses twice from two different companies. It will be paid by either one or jointly by both as per the terms and conditions of the policies.

  • Exhaustion of the Sum

This is the most common enough scenario. Here whether it is planned or an unplanned hospitalization, you need to inform both or all of the insurers about it. You will first need to claim from any one of the insurers of your choice. It will pay you till the sum assured according to the terms and conditions of the policy. In case you still have pending bills, you can then claim from the second insurance company by following the same procedure. It can happen with both cashless and paid methods according to the normal procedure in each case.

This is best understood with an example. Suppose your total medical bills were of Rs. 5 lakhs and you had two medical policies of Rs. 3 lakhs each; you can claim reimbursement of Rs. 3 lakhs from the first insurer and the remaining Rs. 2 lakhs from the second insurer. But you will need to submit all bills and related documents to both the insurers. You would also need to submit a copy of the claim settlement summary from the first insurer to the second insurer. Only then the second insurance company would reimburse you.

  • The Contribution Clause

IRDA has laid out a contribution clause for people holding multiple Health Insurance Policies. According to this clause, if the multiple health policyholder is filing for a claim, the insurer reserves the right to ask the other insurers to bear the proportionate amount of the claim.

This is again best understood by an example. Let’s say you purchased Rs. 4 lakh health policy from four different insurers which makes your total sum assured to Rs. 16 lakhs. Now, if you had a medical claim of Rs. 8 lakhs, the insurance companies can share this claim on a proportionate basis. Here, all insurance companies would contribute their part so that your medical bills get settled. However, there are some conditions attached to it.

  • The contribution clause is not applicable if a policy is fixed in nature or does not have any connection with the treatment costs. Policies with fixed benefits nature will reimburse according to its terms and conditions.
  • For indemnify treatment costs, the insurers do not apply the contribution clause and the policyholder has the right to approach anyone insurer for claim settlement according to the terms and conditions of the policy. Here, the insurer cannot insist on the contribution clause as long as the claim is within the terms specified by the policy.
  • If the insured has multiple policies covering the same risk on an indemnity basis, then the policyholder can only be indemnified the hospitalization costs as per the rules laid down by the policy. This does not apply to benefit policies.

All-in-all, the contribution clause does not hold valid for fixed or defined benefit plans.

Examples to Understand Contribution Clause

Now, let’s understand the contribution clause with a few examples.

  • Let’s say a person has two critical illness policies with two different insurers of coverage of Rs. 10 lakhs and Rs. 15 lakhs respectively. Now, if he is diagnosed with a critical illness, both insurers need to pay the full sum assured as it is a defined benefit plan and the policy ceases after payment. Thus, the person would get a total of Rs. 25 lakhs. It is a fixed benefit plan for which the contribution clause does not hold valid.
  • Now if a person has a health plan of Rs. 5 lakhs from one company and an accidental insurance plan of Rs. 20 lakhs from the second company. Now if he meets an accident and his hospital bills stand at Rs. 4 lakhs; then he can claim the amount from the first insurance company as it is an indemnity plan. He would also receive Rs. 20 lakhs from the second company as it is a fixed benefit plan.

Wrapping up

Claiming from multiple health insurance is easy if you read the terms and conditions of the policy well and follow the procedure laid down well.