Bundled insurance products offer convenience

If premiums matter more or you need extra features, buy the products separately

HDFC Standard Life Insurance and Apollo Munich Health Insurance have come together to offer a combined product that takes care of health as well as life insurance needs of an individual. By filling a single form and undergoing just one medical test, if required, an individual can avail Click2Protect Health by paying a single premium.

“Both the companies are offering their flagship products through one policy. For customers, it works like one policy but at the back, they are two independent products. In the policy document, on one side are the details of health insurance with premium charged. On the other is information pertaining to life insurance,” says Antony Jacob, chief executive officer, Apollo Munich Health Insurance.

As far as the life portion goes, the prospective policyholder has the option to choose between a term plan, whole-life plan and other options. The individual also gets a five per cent discount on the premiums for buying this bundled product. The discount makes the pricing competitive. But a customer can still find a cheaper health and life insurance product in the market. If you are fine with sacrificing convenience over premiums, then you can look at a separate life and health insurance.

If a 35-year-old healthy man opts for a Rs 50-lakh life insurance for a 30-year term and Rs 3-lakh health insurance, the premiums for Click2Protect Health will be Rs 14,024 after tax. For the same, a term plan from Max Life — Online Term Plan Plus — and a health insurance plan from Royal Sundaram — Life Line Classic — would come to around 12,157 after taxes, according to data from Policybazaar.

“The bundled product suits individuals in the 25-35 age bracket who are planning to buy life insurance and also get additional benefit (health) in the same product. At present, life insurance is mainly bought by individuals in this age group,” says Dhruv Sarin, head of health insurance, Policybazaar.com.

Source: Policybazaar.com

While there is a procedural flexibility with bundled products, it also limits your options. Term life insurance policies are standard. But some company may offer you more add-ons or cheaper premiums. In health insurance, the features of policies vary widely. You may want a policy that allows you treatment of illnesses anywhere in the world, which may not be possible in the bundled product.

The bundled product mainly offers convenience and saves the procedural hassles. The individual gets tax benefits under Section 80C as well as under Section 80D of the Income Tax Act. There’s no hassle of maintaining two policies with two different renewal dates. A policyholder can even call up either of the companies for claims or any other service. Any change of address or bank account can be updated through either of the insurers.

The underwriting for the two companies remains different despite following a common form and medical test. It means, if an individual who applies for this product is rejected by one insurer for any reason, the other company could still offer its product. If Apollo Munich, for example, rejects an applicant, HDFC Standard Life would still sell him a standalone life insurance if the individual meets their underwriting norms.

Life insurance is a limited-tenure product whereas health insurance is available for the much longer period. “When the tenure life insurance expires, it automatically gets discontinued. The policyholder will then continue to get health insurance benefit at lower rates. In fact, a customer can choose to discontinue a policy on renewal and continue the other if he wishes,” says Jacob.