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The last few years have seen a surge in various types of health insurance products being launched by various insurance companies. More and more people today are increasingly getting health conscious and many, in fact, are also buying various health insurance products to cover their families from unexpected hospitalisation.
With nearly 15- 20 insurance companies offering several variants of health insurance products, finalising the right product which suits your requirement can be quite a task. Should you go for a plain vanilla health insurance or also include add-on covers? Should you go for an individual plan or a family floater?
The following product categorisation enumerates the pros and cons and should help in enabling you to take the right decision.
Health insurance products can be categorised as:
Hospitalisation benefit policy : This is the standard health insurance policy which covers hospitalisation expenses when the insured is admitted to the hospital for at least 24 hours for illness or injury. Several such policies also cover day care surgeries which are medical procedures for which 24 hour hospitalisation is not required. It also covers medical expenses incurred 30 days before hospitalisation and 60 days post discharge. The cover commences only after the first 30 days during which only accidental related hospitalisation is covered. There are other waiting periods of up to two years for specific illnesses while pre-existing illnesses are excluded for first three-four years.
One can either cover the entire family comprising self, spouse and kids under a single cover which is known as family floater or can cover them individually so each member has a separate cover (sum assured). This type of policy should form the first level of health coverage for every family as it is the only comprehensive health policy in the entire product basket. Such policies offer covers ranging from Rs 1 lakh to 50 lakh.
Top up policy : This policy is designed to enhance your existing health cover provided by the hospitalisation reimbursement policy mentioned above. They cover hospitalisation costs which exceed a minimum voluntary threshold.
For example, if you already have a Rs 5 lakh hospitalisation reimbursement policy and want to increase your cover to, may be, Rs 10 lakh, they you can buy a top up health policy of Rs 10 lakh. This will not pay you for claims up to Rs 5 lakh as you can very well claim that amount from your existing insurer. It will only pay you the amount exceeding Rs 5 lakh. These policies pay claim only when any single claim exceeds the limits set by the policy. Presently, such policies offer cover up to Rs 15 lakh.
Critical illness policies : These policies cover only specific critical illnesses such as cancer, heart attack, kidney transplant, and so on. They do not provide any type of reimbursement towards hospitalisation expenses incurred on other ailments. This policy provides a lumpsum payment, which is typically the sum assured of your policy. For example, if a policy holder having a Rs 5 lakh critical illness policy, is diagnosed for kidney failure and the actual expenses towards the hospitalisation and transplant cost Rs 6 lakh, he will only receive the sum assured, which is Rs 5 lakh.
This is a one-time payment given to the policy holder if he/ she suffers from any of the critical illnesses mentioned in the policy and also survives for 30 days from the date of diagnosis. In most cases the policy ceases to exist once the critical illness claim is paid. The number of critical illnesses covered vary from company to company and can range from a minimum of eight to 30 illnesses.
A variant to these policies are "Surgical benefit" policies, which cover specific list of surgeries and they, too, pay a lumpsum benefit which can be a percentage of the sum assured depending on the surgery. Considering the increasing healthcare costs and for families with a history of critical illnesses, it is advisable to take this type of policy in addition to your basic hospitalisation policy. Both life and general insurance companies offer critical illness covers.
Hospital Cash Policy : As the name suggests these policies provide daily cash which can range from a minimum of Rs 500 for each day of hospitalisation. They do not cover any medical expenses and are designed to cover any incidental costs incurred due to hospitalisation such as transportation, food, and so on which are not covered by reimbursement policies. The daily cash benefits are paid for maximum up to 30-60 days of hospitalisation. The premium depends on the daily cash benefit limits that are selected. Instead of these policies, it is advisable to enhance your existing comprehensive hospitalisation benefit policies.
Unit linked health policies : These type of policies are offered by select life insurance companies and are designed to cater to the dual requirement of covering hospitalisation expenses and creation of a health fund to meet any additional expenses which may not be covered by regular insurance policies. A part of the premium is used for providing hospitalisation cover while rest is invested in funds of your choice for the creation of a "Health fund" from where you can withdraw to meet any additional hospitalisation expenditure after three years of commencement of the policy. Withdrawals are permitted only for the purpose of meeting the additional expenses towards hospitalisation. While the concept of health fund is good, the overall charges can be a dampener. It is advisable to take a separate comprehensive hospitalisation policy and invest the money separately for the creation of a health fund.
While evaluating health cover products, one should focus on comprehensive cover and depending on your requirement and affordability one should choose the health product wisely.
The writer is Chief Planner, Proficient Financial Planners
