7 health policy red flags to watch for before you buy

₹5L

avg. claim on cardiac events in private hospitals

2–4yr

typical PED waiting period most buyers miss

10–30%

co-pay that can silently cut your settlement

Room rent sub-limits

Many policies cap the room rent they'll cover at 1% of the sum insured per day. On a ₹5 lakh policy, that's ₹5,000 per night. In most private hospitals in Bengaluru or Mumbai, a standard single private room costs ₹6,000–₹12,000 per night.

Here's what most policyholders don't realise: the room rent cap doesn't just affect the room charge. Insurers apply the same proportional reduction to all other charges in the bill — doctor fees, ICU costs, surgery fees — if your actual room exceeds the cap. A ₹2,000 excess on room rent can translate into a ₹40,000 reduction in your settlement.

Co-payment clauses

A co-payment clause means you pay a fixed percentage of every claim — typically 10–30% — regardless of the sum insured. It applies every single time you claim, for as long as you hold the policy.

Co-payment is common in senior citizen plans (where it can be 20–30%) and in some policies for people who move from employer group cover. On a ₹4 lakh surgery bill with a 20% co-pay, you're personally paying ₹80,000 — every time.

Waiting periods

Every health policy has waiting periods. The question is how long, and for what.

• Initial waiting period: 30 days for any illness (accidents are usually covered from day 1)
• Pre-existing disease (PED) waiting: 2–4 years before any condition you had before the policy is covered. Some plans offer 1-year PED waiting at a higher premium.
• Specific disease waiting: Certain conditions — hernias, joint replacements, cataracts, stones — often have an additional 1–2 year wait even if you have no PED.

Disease-specific sub-limits

Even after the waiting period is over, many policies cap what they'll pay for specific treatments. Common examples:

• Cataract surgery: capped at ₹25,000–₹40,000 per eye, while actual costs can exceed ₹60,000
• Knee/hip replacement: capped at ₹1–1.5L per knee on ₹5L policies, actual costs: ₹1.5–3L
• Bariatric surgery: excluded entirely in most standard plans
• Mental health treatment: capped at 10–20% of sum insured, though IRDAI now mandates inclusion

Network hospital quality

Insurers advertise network sizes prominently — "10,000+ hospitals!" — but the number is largely meaningless if the hospitals in your city or neighbourhood aren't on the list, or are lower-tier facilities you wouldn't actually want to be treated in.

Cashless treatment is only available at network hospitals. If your nearest quality hospital isn't in-network, you pay upfront and claim reimbursement — a slower, more paperwork-heavy process that can take 30–45 days.

Claim settlement ratio vs. claim amount settlement ratio

IRDAI publishes annual claim settlement ratios for all insurers. A 97% claim settlement ratio sounds excellent. But this ratio measures the number of claims settled — not the amount.

An insurer can settle 97 small claims fully and reject or partially pay 3 large claims worth ₹20 lakh each, and still report a 97% settlement ratio. The metric that matters is the claim amount settlement ratio — what percentage of the total money claimed was actually paid out.

Restoration benefit fine print

Restoration benefit is widely advertised as a major advantage — "your sum insured gets restored if exhausted!" What many policyholders discover only at claim time: most restoration clauses apply only for unrelated illnesses, not for subsequent claims related to the same condition.

If your spouse is hospitalised for a heart procedure and the sum insured is exhausted, a restored sum insured will generally not cover a second hospitalisation for the same heart condition in the same policy year — regardless of what the sales pitch implied.