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

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...

Good time to invest in Infrastructure Funds

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   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...

Mutual Funds: Past Performance is not just everything

Many a times your agent / distributor / relationship manager tries to push you some mutual fund schemes by enticing you with a typical sales pitch…"Sir, this scheme has generated 20% returns in the past one year." And this sales pitch often gets louder when the market conditions have been favourable. Some of the agents / distributors / relationship managers have another unique way of luring you. They say, "Sir / madam this scheme has been awarded the best scheme award in the past by a leading business channel"... And hearing all these sales talks you investors very often get attracted and sign a cheque in favour of the respective scheme.   But please ask yourself do you hear these sales talks when the capital markets turn turbulent? Why is it so that your agent / distributor / relationship manager avoids talking to you during turbulent times of the capital markets and doesn't boast about returns generated by the respective funds or awards being conferred on t...

Stocks with a high dividend yield

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India) Stocks with a high-dividend yield can provide investors additional cash flow. More importantly, it is tax-free   With April 2011 just over, the 'earnings season' is well and truly here. This is the time most companies pay out a portion of their profits as dividends to shareholders. Since dividends are tax-free, they are an attractive income source with a select class of investors, who depend on these for additional cash flow. SIGNIFICANCE A company doing well and generating profits will usually be in a position to declare dividends regularly. Hence, a key parameter one should look at whilst investing in a stock is whether the company has a good dividend record. Typically, dividend yield stocks are large-caps and generally not capital-intensive. This is suggestive of the fact that the downside risk on...

Systematic withdrawal plan

  Start Systematic withdrawal plan Online Although an SWP gives you regular income and saves on taxes in the long term, you cannot open an SWP on a scheme where you have an ongoing SIP   iStockPhoto If you are planning to take a sabbatical from work or are retiring soon, you may be looking at different investment options that give a regular income. Usually, a lump sum is invested to get regular fixed amounts later. Popular products include post office monthly income scheme, Senior Citizens' Savings Scheme and monthly income plans (MIPs). A lesser known option is the systematic withdrawal plan (SWP) in mutual funds. Recently, some funds have even removed the exit load on SWPs if you were to withdraw up to 15-20% in the first year, to encourage people who want to start investing in this instrument. Here is a look at what an SWP is. WHAT IS SWP? Many of us would be familiar with a systematic investment plan (SIP ), where a corpus ...
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