By Annapurna Shastri
Certified Financial Planner, Mumbai-93
If you have ever tried buying a life insurance policy online, it is likely that the insurance company’s website will prompt and ask if you would like to buy an additional health plan too. The health insurance market, which till some years back was exclusively the domain of general insurance companies, has now been invaded by the life insurance providers with each one of them having at least two or three medical insurance policies in their product suite, along with the term, ULIP and retirement plans. How do the mediclaim policies offered by Life insurers differ from those offered by mediclaim companies?
- General insurance (GI) companies usually offer plain vanilla products which are easy to understand, while those offered by life insurers (LI) tend to have a host of different options to choose from, with some policies also investing a part of the premium collected in to the markets, similar to ULIPs.
- Mediclaim policies of GI companies are non benefit policies wherein the actual amount spent is reimbursed in the event of a claim subject to the health cover limit. But health covers offered by life insurers are fixed benefit policies, which pay the insured a fixed amount on diagnosis of any illness irrespective of the actual cost incurred.
- For the same amount of health cover, the premiums charged by a general insurance company is usually lesser than that of a life insurance company. Hence, a medical cover by a life insurer is more expensive.
- Mediclaim policies by GIs offer a cover for a year or a maximum 2 years at a stretch, after which they have to be renewed by payment of premium for the next year. The premium also doesn’t remain constant always and increases when the client moves to the higher age bracket. Health covers by life insurers can be taken for a long term, like 15 or 20 years and the premium to be paid remains constant over the term of the policy.
- Last year, IRDA came out with the facility of health insurance portability, giving the insured customer the right to move his policy to any other health insurance provider if he or she is dissatisfied with the product or service. It is important to note that this facility applies only to indemnity policies issued by non-life insurance companies. Hence health policies by life insurers cannot be ported, which is a big drawback.
With the rising costs of medical treatment, it is always advisable to go in for a health cover with a indemnity benefit, where the actual cost incurred is reimbursed, as a fixed benefit policy may not suffice in case one were to contract a critical illness or any other serious ailment where the cost could run in to lakhs of rupees. An add-on health cover with a fixed outgo can be taken optionally.