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One of the best ways of ensuring you kept getting a no-claim bonus, in the case of medical insurance policies, was by dividing the claim related to any health-related amid two-three policies offered by general insurance companies.
For example, if you have incurred an expense of, say, Rs 1.8 lakh on a medical emergency, dividing it between two medical policies of, say, Rs 2 lakh each, would divide the claim to Rs 90,000 per policy. If there are three policies, the same amount would be divided into Rs 60,000 each. In other words, the more the number of policies, the merrier for both the policyholder and insurer, as the latter would have to bear lesser burden. Of course, it meant more premiums for buying two, three or more policies but the rate of rise of premiums would be slower as well.
Alas, all that would change now. The new health insurance guidelines, which will be implemented from July 1 for group policies and October 1 for individuals, will not allow offsetting of a single expense over multiple policies.
Called the 'contributory clause', this will only be applicable to indemnity plans offered by general insurance companies and not to defined benefit plans (typically offered by life insurers). The latter pay the entire sum assured, if the policyholder is diagnosed with a particular disease.
Under the new guidelines, the contribution clause will apply only in certain circumstances like, if the claim amount is more than the sum assured of a single policy. "This is positive for policyholders, as earlier it was mandatory to declare existing coverage at the time of submitting any claim to an insurer, even if the claim was lower than the sum insured limit. Earlier, an insurer could also invoke the contribution clause if you were covered elsewhere and pay in proportion to the cover it provided. Now, the insured chooses the insurer it wants to claim against. In case it is learnt at a later date that you did not disclose the extra policies you held, it could tantamount to non-disclosure, which cannot happen now," explains Amit Bhandari, vice president - health underwriting & products at ICICI Lombard.
The other advantage of this norm is that younger policyholders who tend to make small claims can keep their claim history in check by claiming against only one insurer at a time and, protect the no-claim bonus.
The cost will be lesser as well. For someone between 30 and 35 years, the premium of buying one policy of Rs 1 lakh is Rs 1,000-2,000. If he/she has four policies, the premium would be Rs 4,000-8,000. On the other hand, a single policy of Rs 4 lakh would cost Rs 4,000-4,500.
Arvind Laddha of Vantage Insurance Brokers says it makes sense to have multiple policies only for senior citizens because one insurer might not offer a big cover to them. Of course, if the senior citizen is a dependent, the employed children can take a top-up policy over and above the company policy for the extra requirement.
