IRDAI has made it mandatory for insurers to launch a standard health insurance product, making comparisons easier for policyholders.
By Subrata Mondal
The importance of health insurance can’t be emphasised enough. With rising medical inflation, increase in lifestyle-related illnesses and the outbreak of new viral infections such as Coronavirus the need for health insurance has grown manifold. But with so many choices available in the market, consumers mostly get confused making the selection process complicated and time-consuming. It is for this reason many tend to avoid the in-depth study of the health insurance policy at the time of buying.
Realizing the gap, the Insurance Regulatory and Development Authority (IRDAI) has now made it mandatory for insurers to launch a standard health insurance product, making comparisons easy based on premiums and customer service for policyholders.
According to the recent guidelines, all general and health insurers have to come out with a Uniform Health Insurance Product, from 1st April 2020 onwards, with common wordings across the industry. The policy will have a common nomenclature of Arogya Sanjeevani Policy followed by the insurer’s name. The intent is to make the health insurance simple and standard so that more people can buy it, increasing insurance penetration in the country.
Benefits to policyholders
From standard terms and conditions, easy portability to a smooth claim process, the new uniform structure of health insurance policies will be beneficial for policyholders in more ways than one.
1. Standard Terms & Conditions
The regulator has mandated insurers to offer a standardized product, which will cover basic hospitalization needs of policyholders with the minimum sum insured of Rs 1 lakh and a maximum of Rs 5 lakh.
However, before going for the policy, policyholders should also be aware of the limitations such as room rent capping and co-pay, among other things. For example, the uniform policy will have a room rent limit up to 2 per cent of the sum insured or Rs 5000, whichever is lower. Similarly, for Intensive Care Unit (ICU) expenses up to 5 per cent of the sum insured subject to a maximum of Rs 10,000 per day will be covered.
You can buy the policy for your family, consisting of spouse, parents and parents-in-law and dependent children (between 3 months and 25 years of age) and can pay the premium depending on your preferred mode for payment-monthly, quarterly, half-yearly or yearly. The option of lifelong renewal is also available with the minimum entry age of 18 years and maximum age limit of 65 years.
Porting is common and easy in Motor Insurance because the policy structure is standard and when you shift from one insurer to another you can easily transfer without losing the policy benefits. Similarly, with the standardisation of health policies now, it will be much easier for policyholders to port their policy without being worried about losing their continuity benefits.
3. Easy to Claim
Limited knowledge about restrictions and exclusions in the health policy often become a bone of contention at the time of settling the claim. With standard wordings, it will, however, be much easier for a customer to understand the policy wordings. It will also make the claim process simple and smooth, making it a win-win situation for both the policyholder and the insurer.
4. Low Cost
The regulator has asked insurers to determine the premium of the standard policy depending on the features of the standard cover proposed to be offered. The premiums are likely to be low due to competition as all insurance companies will have to offer the standard product.
Who should buy?
Arogya Sanjeevani Policy has been designed to cater to the needs of lower and middle-income segment, particularly in Tier II, III and IV towns where medical costs are lower. To cater to their needs, the policy also offers the facility of paying a premium on an instalment basis. For the higher coverage of more than Rs 5 lakh, one can consider other plans in the portfolio of insurance companies, which have wider coverage and fewer restrictions such as sub-limits and co-payment.
To sum it up, Arogya Sanjeevani Policy is ideal for the base level coverage with its standard features and exclusions.
(The author is Executive Vice President, IFFCO-Tokio General Insaurance)