LIC Health Protection Plus has a low net cost compared to other general health insurance product. It also provides market-linked returns on a part of premium
LAUNCHED in April 2009, LIC Health Protection Plus is the kind of product in the market that clubs health insurance and investment. It works like any other unit-linked insurance product (Ulip), releasing a part of premium towards health cover while the rest goes into investment. Very few insurance companies provide such a plan. LIC initially had launched health plus and consecutively released an upgraded version of it as health protection. This scheme offers a single fund called health protection fund where money is parked. The fund is more or less a balanced fund, ensuring safety of investors.
COST STRUCTURE:
Unlike regular health product in which the whole premium is an expense to policyholders, LIC Health Protection gives an opportunity to invest the premium and earn market-linked returns. Part of the premium goes for veritable expenses. Premium allocation is high in this scheme as compared to NIL allocation in typical Ulips. Policy administration charges, as a tradition of LIC, are lowest in the industry. Other major expense in the product is morbidity expense that covers hospitalisation expenses and surgical benefits. Considering these charges, the net yield of the product at 6% and 10 % p a would be 3.1% p.a. and 6.8% p.a, respectively
BENEFITS:
The product provides health cover for the entire family, including newborn from the age of three months. Both hospital cash benefit and major surgical benefit are covered under the plan. So we can say individual health plan, family floater and critical illness all three are covered in one plan. This scheme also allows the insured to claim for domiciliary treatment that is expenses incurred in respect of any disease for which they need not be hospitalised. Another significant benefit of the scheme is that after payment of three premiums, one can, if required, pay alternate premiums that is skip fourth year and pay the fifth year premium. The policy would not get lapsed under such arrangement. The product also offers increase/ decrease in premium depending on the need of coverage required.
PERFORMANCE:
LIC Health Protection Plus offers only one investment option (fund) called health protection fund. This is more of a balanced fund with equity exposure limited to a maximum of 50%. The fund is just a year old. Overall, the fund has not performed that well. It has been unable to beat the benchmark in the long term. But the past six months performance of the fund is encouraging, indicating the fund is picking up gradually.
Since the fund has an AUM of only 45 crore it is passively managed. The fund manager is of the view that it is primarily a health product and so return is not the major focus of policyholders rather liquidity would be, as
policyholders has the option to do partial withdrawals in
case of domiciliary treatment.
PORTFOLIO REVIEW:
The fund has more exposure to debt than equity due to the basic conservative nature of LIC. Portfolio comprises of only 19% of equity, while the rest is invested in bond and money-market instruments. In equity, per say, the fund has high exposure in sectors like oil and gas, banking and healthcare. There is reasonable exposure in the FMCG sector also. Media and real estate are two sectors which fund manager is not really in favor of. Telecom, which is an under performing sector, is absent from LIC Health Protection Plus's portfolio. The company has exposure in metals as well. The fund manager is of the view that though the metal sector is not performing currently, three years down the road, the sector will do well.
DEATH/HEALTH BENEFITS:
LIC Health Protection Plus does not provide any death benefit. Accumulated fund value is handed over in case of death of the insured. In case the spouse and the children are also covered then the premium will be waived off and the cover will continue for them. The product offers benefits of hospital cash back, surgical treatment and domiciliary treatment.
Under surgical benefit one receives the whole or part of sum insured on diagnosis. The limit of surgical benefit is 100% of the sum insured annually and 300% over the policy tenure in respect of each insured family member. The policy covers almost 48 illnesses under surgical illness benefit category. Domiciliary health benefit is available only after three-year premium has been paid.
OUR VIEW:
Compared to general health insurance product the net cost in LIC Health Protection Plus is low. It also provides market-linked returns on a part of premium. One major attraction of this product is domiciliary health benefit and that there is no age limit for this benefit, unlike hospital cash benefit and surgical benefit which lasts only till the age of 75 years. But, this product does only allow any tax benefit under section 80D, and not under section 80C. Also this product does not have a surrender option. One can at the maximum partially withdraw 50% of the fund value if case of emergency. Alternately, one can buy a combination of family floater and critical illness health plan. But not as many illnesses are covered under pure critical illness plan. As far as performance of the fund is considered it's a mix view.
