New Year 2025 resolutions: Don’t let THESE health insurance blunders derail your financial planning

New Year 2025 is less than a week away, making it the perfect time for people to revisit their health and financial priorities. One of these is having a proper health insurance plan. However, navigating health insurance can feel like solving a puzzle.

Terms like deductibles, co-pays, exclusions, riders, and others can be overwhelming for someone new to health insurance. Lack of awareness may lead to delays in insurance purchases or, worse, the wrong plan with hidden clauses. As we prepare to enter the new year, experts highlight key mistakes you can avoid when purchasing or reviewing your health insurance plan in 2025.

Insufficient coverage

A plan with all the necessary features and a cashless facility is useless if it has a poor hospital network in your city. Additionally, experts believe the plan must cover all daycare procedures, pre- and post-hospitalisation expenses, and other benefits.

“When buying health insurance, looking at the larger picture is essential.Start with the coverage; ensure it includes hospitalisation, daycare procedures, and pre-and post-hospitalisation expenses. Check if the insurer has a strong network of hospitals near you for easy access to cashless treatment during emergencies,” said Rakesh Jain, CEO of Reliance General Insurance.

Highlighting the importance of comprehensive coverage, Rakesh Kaul, Chief Business Officer, SBI General Insurance, said, “Look for policies that offer comprehensive benefits, including preventive health checkups, critical illness riders, and senior citizen coverage, as these also qualify for tax deductions.”

Policy exclusions

Just like it is essential to know what facilities your plan covers, it is equally important to understand the factors that are not part of your insurance plan, whether it is maternity care, critical illness, dental treatment, cosmetic surgery, or an Outpatient Department (OPD) facility.

“Be mindful of the policy exclusions; understanding what isn’t covered can save you from unpleasant surprises later. Compare premiums, but don’t compromise on coverage to save some money. Finally, check the insurer’s track record, especially their claim settlement ratio, to ensure a smooth experience when you need it most,” Jain noted.

Wrong add-ons

A health insurance policy’s features can be enhanced by opting for a rider and an add-on. They offer extra benefits like enhanced coverage for critical illnesses, room rent waivers, health checkup facilities, etc. While it is a good way to expand the features of a base health insurance plan using this feature, a wrong add-on makes the policy expensive without any advantage.

“Add-ons can enhance your coverage, but selecting the wrong ones can lead to unnecessary hikes in premiums without adding meaningful value to your coverage. For example, purchasing a maternity cover add-on might not make sense for someone who doesn’t plan to start a family in the near future,” Ajay Shah, Head-Distribution, Care Health Insurance, explained.

“Choosing unsuitable add-ons, such as critical illness riders or coverage for ailments irrelevant to your life stage, can lead to unnecessary premium costs and inflated costs without adding value,” Rakesh Kaul said.

Saving too much on premiums

Another mistake people make when buying health insurance is selecting a low-premium plan at the expense of poor coverage and low sum insured. Experts believe that while opting for cheaper insurance may prove efficient at the time of purchase, it might prove costly in the future.

“To avoid major mistakes while purchasing health insurance, individuals should refrain from making decisions based solely on cost or premium,” said Shashank Chaphekar, Chief Distribution Officer of ManipalCigna Health Insurance.

“Selecting the most affordable health cover available without assessing its benefits, insurer’s network of cashless healthcare providers or claim settlement ratio can be a decision that will eventually backfire,” Ajay Shah of Care Health Insurance noted.

Ignoring pre-existing conditions

“Hiding pre-existing medical conditions to lower premiums can backfire when claims are denied. Finally, delaying the purchase of health insurance can increase costs and limit coverage for illnesses diagnosed later,” said Jain.

Another point to keep in mind while taking a health insurance plan is the waiting period for PEDs. “Understand the waiting periods for pre-existing conditions and other specific treatments. Select the package with preferred waiting periods,” Shah told Livemint.

Ignoring the policy renewal deadline

Rakesh Jain warned that missing the deadline for health insurance policy renewal may deprive policyholders of benefits like no-claim bonuses or PED coverage.

“Many people also renew without reviewing their policy; it’s worth checking if the current coverage still fits their needs, whether the family has grown, or if your medical needs have changed. Don’t forget to use any wellness benefits the insurer offers, such as health check-ups or premium discounts, as these can add value to your policy,” he added.

Poor-assessment of insurers

Regardless of how much better coverage a health insurance plan provides, it is crucial to review insurers’ credibility. Experts advise people to check a health insurance company’s claim settlement ratio and net promoter score before purchasing its plan.

“Check the health insurer’sclaim settlement ratio to gauge reliability in processing claims. Ensure that the policy offerslifelong renewability and has a robust network of hospitals for cashless treatment. Additionally, evaluate the health insurer’sNet Promoter Score, including reviews regarding claim processing efficiency and overall satisfaction from current policyholders,” Shashank Chaphekar of ManipalCigna Health Insurance advised.