Skip to main content

Decoding Health Insurance



THE possibility of one undergoing some kind of expensive health treatment during the lifetime is much more than a sudden demise. Given the cost of treatment at private healthcare facilities, it's almost beyond reach for the Indian middle and lower income class to meet such expenses. Despite that, the penetration of health insurance in our country is extremely low. Only about 2% of the India's population is covered under medical insurance.


   This is partly because of a lack of understanding of various products and the need for these products. There is a wide range of health products available in the market, each with its own advantages and drawbacks. Understanding them is important to make the right choice.

INDIVIDUAL HEALTH PLAN

The simplest form of health insurance is the individual mediclaim policies. It covers hospitalisation expenses for an individual for up to the sum assured limit. The insurance premium is dependent on the sum assured value. Unlike in the past, most plans now come with sub-limits for each of these heads.
   

Drawback:

There are restrictions in terms of preexisting ailments, out-patient treatments and other exclusions. There is a limit on maximum age at entry.

FAMILY FLOATERS

These plans consist of shared Individual Health Plan. The benefits are mostly the same, but the sum insured can be used for the treatment of any or all members of the family and not a single person. This reduces the need for you to pay from your pocket. It comes at a lower premium.
   

Drawback:

Most family floaters have an upper age limit of 55 years or 60 years. Moreover, coverage of children under this policy will cease once they reach 25 years. Therefore, a family floater is more suitable for a young family.

CRITICAL ILLNESS

This is not a category in itself, but an addition to the individual or family floater health plan. In India, these plans are sold separately, this is a major flaw in the sales of health insurance. An illness plan provides financial assistance if the insured develops a serious ailment, such as cancer or has a stroke.
   

Drawback:

This is not a comprehensive health insurance cover and only covers specific situations. Moreover, a diagnosis of a critical ailment like cancer, for example, may not be enough to trigger payment of the policy if the cancer has not spread or is not life threatening. Other restrictions may include a specific number of days the policyholder must be ill or must survive after diagnosis.

SENIOR CITIZEN HEALTH PLAN

Most basic mediclaim plans cap the entry age at around 60 years while Senior Citizens Health Plans are generally for the people in the age group of 60-80 years. Most can be renewed lifelong or up to the age of 90, and have a fixed coverage of, say, Rs 1 lakh or Rs 2 lakh.
   

Drawback:

One should watch out for the illnesses as many ailments are excluded from these plans.

DAILY HOSPITALISATION PLAN

Hospital Cash Plan is a daily cash benefit insurance policy that assists the policy holder to meet all his/her miscellaneous expenses during the period of their hospitalisation generally not covered in the regular health insurance. It acts as a supplement to the health insurance policy.
   

Drawback:

These plans are not sufficient in themselves as they only cover hospitalisation expenses and not medical costs.

UNIT-LINKED HEALTH PLAN

Although life insurers are selling these policies, they may not cover life risk. Out of the premium paid, a portion goes towards medical coverage and the rest of the premium is in the stock market just like a ULIP. They are defined benefits and the payout is not dependent on the cost actually incurred.
   

Drawback:

Linked to market, they are subjected to market risks and also costs like fund management charges.

MEDICAL COVER FROM LIFE INSURERS

Life insurance companies, too, have started offering health plans. These are long-term, having a fixed premium for, say, three, five, or even 10 years. These policies do not need to be renewed every year. There are variations in this policy, including some cash back policies also.
   

Drawback:

Claim procedure is relatively difficult in health policies provided by life insurers. Claim settlement ratio is higher at general insurance.

 


Popular posts from this blog

Franklin India High Growth Companies Fund

Franklin India High Growth Companies Fund Online One of the key developments that the Street is keenly waiting for is a cut in interest rates by Reserve Bank of India . With demand rising gradually, a rate cut is expected to boost earnings growth for companies. In such a situation, schemes which invest in high growth companies are best suited, especially when seen from a long-term perspective. One such scheme is Franklin India High Growth Companies Fund. Fund managers Anand Radhakrishnan, Roshi Jain and Srikesh Nair strictly follow valuation parameters when it comes to choosing stocks.Valuation parameters, such as enterprise value, price-to-earnings growth ratio, forward price-to-sales ratio and discounted earnings per share, play a critical role in selecting companies for investments. Taking into account these parameters, the fund managers invest in companies which are poised for high growth in their respective sectors. This approach has been in favour of the scheme and it has perform...

L&T Growth

Invest in Mutual Funds Online Download Mutual Fund Application Forms   L&T Growth Fund (LTGF) is open-ended diversified equity fund that invests predominantly in large caps. LTGF follows the growth style of investing and has been in existence for over 10 years now.   Type of scheme Open-ended Category Diversified equity Sub-category Large Cap Style Growth Launch date September 17, 2001 Risk-Return proposition High risk-Average return   Investment Objective and Proposition The fund's primary investment objective is "generate long term capital appreciation income through investments in equity and equity related instruments; the secondary objective is to generate some current income and distribute dividend. However, there is no assurance that the investment objective of the scheme will be achieved." Following large cap ...

Common errors that couples make while investing

Most couples plan their strategies together but make mistakes while investing. Here’s how they can avoid the common errors Make no mistake. Ignorance is no longer bliss. In fact, many couples goof-up while investing together because they are not financially transparent to each other and don’t share a common goal. KEEPING SECRETS You may find questions from your spouse as an intrusion into your privacy, but financial planners believe that sharing financial details with each other is the first step that a couple takes towards their family financial goals. If you plan to invest together, then it’s important that you should be transparent to each other on the financial front. The whole idea is that you should be able to determine how much you will set aside for investments after making all the deductions for personal and household expenses. IMBALANCED APPROACH As a couple, you may have huge assets and hold stocks, but it’s important that you should direct a part of the investments for emer...

Mutual Fund Exit Load Changes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...

Debt Mutual Fund Dividends are Taxable

DDT is deducted when a non-equity fund declares dividends. Equity and balanced fund dividends are tax-free The AMC is correct to deduct the dividend distribution tax (DDT) as it is mandated by tax laws. DDT in mutual funds is deducted every time a non-equity fund declares dividends. Equity fund and balanced fund dividends are tax-free . It is possible that you have invested in a non-equity fund for the first time or have received the dividend under a non-equity fund for the first time. That is why this is the first occasion when you have come across DDT.   The rate at which non-equity schemes deduct DDT has also gone up after the July 2014 budget. This is due to a change in calculation methodology. Earlier, if the fund has to declare a dividend of R 100, it used to make a provision for R 128.3, paying R 28.3 to the taxman and distributing the balance to the investor. This allowed the investor to bear less tax since the effective tax rate was 22.07 per ce...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now