Health insurance: Call for plain vanilla product to attract youngsters

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Updated: February 26, 2019 7:26:10 AM

The standard product, which will have to be offered by all general and health insurers, will incentivise young policyholders

Standard products cannot be combined with critical illness covers or benefit based covers.

In order to make health insurance policies simple, the insurance regulator has issued draft norms for standard health insurance products. The standard product will have the basic mandatory covers and will be uniform across the market. The standard product will be offered on indemnity basis only and will have no additional add-ons or optional covers. Standard products cannot be combined with critical illness covers or benefit based covers.

The standard product, which will have to be offered by all general and health insurers, will incentivise young policy holders and will have standard exclusions as specified by the regulator. The Insurance Regulatory and Development Authority of India (Irdai) has advised that the standard product must be priced in such a manner that it will incentivise young customers to buy health insurance at an early age and ensure continued renewals.

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Will cover Ayurveda, Unani
The minimum basic sum insured under the basic cover will be Rs 50,000 and the maximum limit will be Rs 10 lakh. Standard product will be offered on family floater also. The basic standard policy will cover expenses incurred on treatment under Ayurveda, Unani, Sidha and homeopathy system of medicines subject to fixed and standard sub-limits based on the sum insured.

The minimum entry age for the principal insured has been kept at 18 years and the maximum age for entry is 65 years. There is no exit age once the proposal is accepted, provided the policy is continuously renewed without any breaks. A policy can be renewed for life. Dependent children will be covered from age 0 to 25 years. Currently, a health insurance policy can be either individual or floater, and one can increase the sum insured at the time of renewal.

At present, buying a health cover can be tricky as there are multiple products in the market. The terms and conditions of pre- and post-hospitalisation offerings, no-claim bonus and waiting period for specified ailments also vary from company to company. Then a policyholder will have to look at the treatment-wise limit for amounts one can claim. If the claim amount exceeds the amount set by the insurer, one has to pay the balance despite having a higher overall sum insured.

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Hospitalisation expenses
The draft exposure has underlined that hospitalisation expenses will cover room, nursing, surgeon, consultants, specialists, anaesthesia, blood, medicines, operation theatre charges, cost towards diagnostics, etc. Expenses on hospitalisation for a minimum of 24 hours only will be admissible. However, the time limit of 24 hours will not apply when the treatment does not require hospitalisation as specified in the terms and conditions of policy contract.

Pre-hospitalisation medical expenses incurred for a period not less than 30 days prior to the date of hospitalisation will be admissible. Post-hospitalisation, medical expenses incurred for a period of not less than 60 days from the date of discharge from hospital towards consultant fees, diagnostic charges, medicines can be claimed. The draft exposure has also mentioned wellness features such as health check-ups and consultation services, disease management, fitness activities, outpatient consultations or treatments be made available to all the insured.

Cumulative bonus
The sum insured will be increased by 5% for every claim-free policy period provided the policy is continuously renewed without a break subject to maximum of 50% of the sum insured under the current policy period. No deductible features are permitted under the base cover. Add-on or optional covers will not be allowed with the standard policy.

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At present, while buying a health insurance policy, one must ensure that the cumulative bonus is stated explicitly in the prospectus and even in the policy document. A policyholder must look at the product information on the company’s website, which will include a description of the product, clauses and premium rates inclusive and exclusive of the service tax payable. If the policyholder has made a claim in the policy year, the insurer cannot load any charges on an individual insurance policy at the time of renewal.

Ashish Mehrotra, MD & CEO of Max Bupa Health Insurance says, standardised products across health insurers will encourage customers to buy health insurance as the products will be much simpler to comprehend, enable them to analyse the products better and choose what’s right for them based on their need. “Irdai has mandated various covers in the standard product including hospitalisation expenses, Ayush Treatment, pre and post hospitalisation, wellness incentives, standard co-pay and a cumulative bonus which is commendable as it will play a huge role in drawing a new set of audience towards health insurance,” he says.

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