Health Insurance Policies sold in India

Health Insurance sector has come a long way in India since the opening of the market. Earlier only 2 policies were available. Mediclaim and Personal Accident. However with arrival of private insurance companies and standalone health insurance companies there has been tremendous innovation in policies offered in the Indian insurance market. Here is a list of popular health insurance policies available in the Indian insurance market.

Hospitalisation indemnity products

• This is the most popular category of health insurance product available in India
• This product pays for all the expenses incurred for the treatment of the policyholder subject to the terms and conditions and hospitalisation of the insured.
• This cover is provided on an indemnity basis
• This product covers charges for hospital bed, patients diet, professional fee of brokers, surgery and operation theatre charges, medicines and consumables.
• Coverage of disease under the policy may differ from policy to policy.
• In some products there are limitations on payment of particular expenses for example room rent would be payable only up to 2% of the sum assured.
• New features are being introduced in indemnity products like daycare surgeries which do not require hospitalisation, coverage of maternity etc
• The hospitalisation products differ in exclusions, waiting periods and cost-saving provisions.
• Some exclusions like war and invasion, HIV, fertility, cosmetic procedure, self injury, adventure sports are not covered in any policy.
• Most of the policy also provide for a waiting period of 30 days before the benefit may commence for example no claim would be paid if the disease occurs within 30 days of taking the policy.
• Policies also provide waiting period of 12-and 48 months for a specific diseases.
• Insurers provide cash less services wherein payment to hospitals are made directly and policyholder did not pay any amount for the treatment.

Personal accident

• Personal accident policies usually cover lump sum benefit payment in the event of death or permanent disablement and a weekly compensation for temporary disablement.
• The amount of compensation depends on the sum assured chosen.
• This policy does not pay any amount incurred for treatment of policyholder.
• It only pays a lump sum to the policyholder.
• Many companies are launching policies for more than one year also
• Some policies also offer innovative coverage is like cost of modification of house or  vehicle or covering medical needs after accident

Critical illness

• Over the past few years instances of dreaded diseases like cancer, heart attack, brain hemorrhage has increased quite significantly.
• Treatment of these diseases requires very high expenditure and the hospitalisation products usually do not have such high sum insured.
• Further these diseases may require long-term nursing care or home-based nursing which will require further expenditure.
• These diseases may have devastating affect on the finances of the policyholders and he may not meet the expenses out of the savings.
• In order to meet this contingency Critical Illness Policies has been devised to take care of the huge cost of treatment.
• Under these Critical Illness Benefit Policies once the policyholder is diagnosed with any specified critical illness, a lump sum payment is made to him on such diagnosis.
• The insurer does not pay any medical expenses related to the disease, it pays only lump sum amount as agreed. The policyholder may or may not incur such expenses.
• Critical illness is available as a stand-alone product and also as a rider to life and nonlife policies.
• These policies cover high sum insured than usual indemnity products.
• Some critical illness indemnity products reimburse only some of the cost due to critical illness and are usually priced less.

Daily Hospital Cash Benefit

• This is an innovative product under which instead of paying full treatment expenses of the policyholder the insurers pay a fixed daily allowance.
• While taking the policy the insured has to choose the amount of daily allowance required for example daily allowance ranging from Rs.100 to Rs.5000 are available. Here the policyholder is not required to choose the sum insured but instead he can select whether he wants a daily allowance of Rs.100 per day Rs.1000 per day.
• He will have to pay the premium based on the amount of daily allowance selected.
• Once the claim occurs the insurance company pays the daily allowance as stipulated in the policy irrespective of actual expenses of the insured.
• In daily Hospital cash plan principle of indemnity does not apply strictly.
• Say one policyholder is admitted in hospital for five days. He has selected a daily allowance plan of Rs.1000 per day. The insurance company will reimburse him Rs.5000 without asking any questions whether he has incurred less or more amount.
• This plan can be taken as a stand-alone product and also as a rider with Hospital indemnity policies.
• These plans are useful when the Hospital indemnity plan is not sufficient to cover fully the treatment and incidental expenses.
• For example say in a normal indemnity plan room rent would be payable only up to 2% of the sum assured. The balance amount is being paid by the insured. Now if the takes Hospital cash plan he gets an additional amount on being admitted. So he can cover these incidental expenses without paying from his pocket.

 

High deductible Hospital indemnity cover

• These are also new products recently introduced in the market. These are meant for persons who are having hospitalisation policies with low sum insured.
• These policies provide top of coverage beyond deductible chosen at proposal stage which may range from rs.1 lakh Rs.5 lacs.
• The coverage in these policies start from Rs.1 lakh i.e, no claim would be paid if the amount is below Rs.1 lakh. The insured has to be bear claim up to the initial deductible amount.
• As the deductible increases the premium amount also reduces since the chances of reaching the higher bracket of loss is less.
• This product is best suited for employees or persons who have low sum insured in indemnity policies and want to safeguard themselves from heavy medical expenses.

Disease management covers

• This is a new category of product added in the insurance market.
• Under this category insurers provide cover to patient who are already suffering from chronic diseases like diabetes and cover is provided for some medicines and regular laboratory tests on OPD basis in addition to other coverage.
• This product is still in very early stages in India and may be offered for more diseases in time to come

Outpatient coverage

• In all hospitalisation indemnity products coverages are only provided if the policyholder is hospitalised for at least 24 hours.
• In many cases it is seen that many small surgeries do not require 24 hours hospitalisation. In these cases the policyholder has to bear themselves the cost of treatment in spite of having hospitalisation policy.
• Though insurers are offering in some policies benefit of daycare surgeries where they may not undergo hospitalisation but due to increased chances of moral hazard, the product is still in development stage.
• Insurers may also launch this product if they negotiate a lower cost from the health care providers for OPD coverage.

Investment products and health savings accounts

• This is a new category of product which offers both hospitalisation and savings.
• A part of premium collected under the policy is used for risk coverage for paying claims and the other portion is accumulated as savings under the policy.
• This type of products are mainly offered by the life insurers
• In usual hospitalisation products the period of cover is one year and after the cover expires no amount is refunded to the policyholder but in this product every year some portion of the amount paid by policyholder is accumulated as saving and is refunded to the policyholder after a particular period.
• Since these products have saving elements with this may become popular in the market in time to come and could be an effective solution for the problems faced by senior citizens in getting affordable health insurance.
• In practice these products can meet cost of frequent and small ailments and also critical diseases with high deductible.

Senior citizens product

• Some insurance companies have launched products catering to the need of senior citizens.
• These products allow into entry till a higher age and can be renewed up to 80 to 90 years.
• Since the incidence of claims in a higher age would be very high these products incorporates cost sharing features like copayments and sub limits to keep the claims in check.
• However still the insurance companies are quite reluctant to offer insurance cover to senior citizens.
• In usual indemnity policies the insurance companies charge very high rate for age above 60 years which is a big deterrent for people to take hospitalisation policies.
• Maybe in time to come we can see more such products for senior citizen.

Micro insurance products

• Micro insurance products were launched with a view to cater lower income group population and poor strata of the society.
• The sum assured in Micro insurance is below Rs.30,000.
• These policies are governed by the Micro Insurance Regulations of IRDA.
• Various NGOs and community organisation take Micro insurance as a group policy for their members.
• IRDA’s rural and social sector obligation requires every insurer to sell a specified number of policies and rural and social sectors.
• Penetration of Micro insurance products has not been very high since the cost of acquisition for insurance companies is very high in case of Micro insurance products.
• It is more feasible and cost-effective to offer these products through NGOs and voluntary organisations who can purchase this product in bulk for their members.

International coverage products

• Many companies are providing insurance cover for travel outside the country.
• These policies provide protection against health contingencies occuring during international travel, loss of baggage and cover for a flight cancellation.
• Expenses for medical treatment during an overseas visit may be very high and could be beyond the means of the traveler. This cover protects him from such contingencies.
• Some countries insist on valid travel insurance before granting of Visa.
• Since these products are expensive the demand is not very high and the policyholders and selective.