Youâre about to buy health insuranceđ„. The agent pitches a policy with a cover totaling 5 Lakhs for a bargain price of just âč7000 a year. But then he sweetens the pot even further. He promises to cut down the premium by 25% (roughly âč1800/year) if only you agree to a 20% co-payment clause. You think thatâs amazing and you sign off on the agreement. Wow, you just saved âč1800.
đž9 months later, you suffer an accidentâżïž
Youâre hospitalized and you need extensive care. Thankfully you make a full recovery and the bill adds up to âč2 Lakh. No problem. Youâve got insurance. However, the insurer only pays âč1,60,000. They ask you to pay the remaining âč40,000 out of pocket since you promised to co-pay 20% of the bill.
đžYou start doing the math. You saved âč1,800 but you had to pay âč40,000 because of the co-payment clause. It would take ~22 years worth of premium savings to make up for this fatal mistake. Not something you want in your insurance policy
âĄïžCo-payments almost never make sense unless they are mandatory or youâre buying it for someone whoâs old with pre-existing diseases. In which case a co-payment clause can bring down premiums drastically.
Source: Ditto Insurance
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