As medical needs and emergencies come unexpected, it is better to take a health insurance cover to tide over the expenses.
An increasing trend among non-life insurers is to avoid selling health insurance policies as profits are declining in this business. This is seen more in the cases of select public sector companies.
On the other hand, life insurers like LIC are busy advertising the benefits of their newly launched health plans. As a consumer, you are bound to be confused. So, let us throw some light on this situation.
Health insurance is a catch all term that covers three distinct policies, a health policy reimbursement to you, the actual hospitalization cost for treatment of any diseases and is offered only by non-life insurers. Such policies are popularly called Mediclaim policies (Mediclaim is actually a brand name, which has now become a general term).
The other two plans are offered by both life and non-life insurers.
One can be loosely referred to as a Hospitalization Policy, where you primarily get a daily allowance for every day spent in the hospital. Some policies provide higher daily allowance for stay in intensive care unit (ICU). Others have a provision for lump payment if you undergo the surgical procedures covered in the policy.
The next type of health insurance covers critical illness. Given the increased stress and strain of modern life combined with unhealthy and sedentary lifestyles, most of us are prone to serious illness. But advances in modern medicine ensure that most of us survive these. This however comes at a cost and makes a serious dent in our ability to pay, other from salary or business. This is where a critical illness cover can step in and pay off a lump sum benefits.
Most life insurers have for long offered these covers as riders (riders are covers for additional risks or to enhance the existing risk covers).
Now, these critical illness covers are loss being offered as standalone policies for specific illnesses like cancer. These policies are recommended for salary earners.
A relevant question is would one needs a hospitalization policy if s/he already has a Mediclaim policy?
A Medicalim policy only reimburses the expenditure incurred in the actual repayment of the disease/illness at a hospital. There are several other expenses that are typically incurred which the Mediclaim policy does not reimburse. Expenses such as travel attendant’s lodging, loss of income (for both the patient and the attendant), pre-hospitalization diagnostic tests, medicines among others can run up to as much as 30 to 40% of the total treatments cost. A hospitalization policy takes care of these.
You will find that the policies offered by life insurers are actually additions and not replacement for Mediclaim policies.
Remember, it is an absolute must that you and your dependents have adequate cover on your Mediclaim policy. It cannot be replaced by any other kind of policy.
When it becomes to hospitalization mad critical illness policies life insurers offer excellent products. Such policies should be a necessary part of your risk over portfolio.
Our recommendation is based on the fact that policies offered by life insurers cannot be cancelled during their tenure. Non-life policies can be cancelled.
Non-life insurers normally retain the right to terminate any contract of insurance even during the tenures of the policy, by sending you a 30-day notice. In such cases, the insurer will then refund a pro-rata premium for the unexpired tenure of insurance. This right is exercised rarely but is not unknown for corporate insurance policies.
Also, policies issued by life insurers guarantees a cover during their entire tenure. Non-life insurers may not agree to renew the policy at the end of tenure.
Thus, if you intend to buy a Mediclaim policy there is no choice but call a non-life insurer. For other two types of health Insurance policies, our recommendation is to choose a suitable non-savings product offered by a life insurer.