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    Types of health insurance policies available

    May 13th, 2010 by
  • Individual Health Plans (IHP): It commonly known as mediclaim policy and it is the simplest form of health insurance. It normally covers hospital treatment expenses (minimum 24 hour hospitalization required) for an individual up to the sum assured. It normally does not cover pre-existing diseases and complications arising from them for the first 4-5 years of the policy. For every claim free year, additional coverage or renewal discounts are provided. Some IHPs currently in the market include Medi Classic by Star Health & Allied Insurance, Health Advantage Plus by ICICI Lombard General Insurance among others.

    • Example: If you have taken an IHP for 4 members of your family having a cover of Rs. 2 lakhs each, if 2 members face a need for hospitalisation in a particular year, each of them will be able to recover up to Rs. 2 lakhs as each of the policies are independent.

    Family Floater Policy (FFP): This is an insurance plan for a family. It is very similar to an IHP. The sum assured is not restricted to a single person. It can be used for treatment of any or all members of the family i.e. the sum assured value floats among the family members. Premium for a family floater policy tends to be lower than for separate insurance cover for each of them. A family is defined as comprising of the insured (proposer), spouse and children. Generally, parents, siblings and in-laws are not included. However, there are some policies like the “Happy Family floater policy” of Oriental insurance company that allows the parents and in-laws to be included subject to the approval of the underwriter. Family floater policy is beneficial for a family because it gives a big cover and the probability of more than one family member getting hospitalised in any given year is very low. Some FFPs currently in the market include Health Wise Policy by Reliance General Insurance, Parivar by National Insurance among others.

    • Example: Anil has a family of three people. He takes a family floater policy with a sum assured of Rs. 6 lakhs. Any family member can claim up to Rs. 6 lakhs in expenses, but the cover will go down by that much amount for the year. Assume one member of Mr. Anil’s family had to be hospitalised and the hospitalisation expenses came to Rs. 5 lakhs. This amount will be paid by the insurance company but the balance cover available for that year will be Rs. 1 lakh. Next year again, it will begin with Rs. 6 lakhs provided the policy is renewed.

    Critical Illness Plan- Rider: This is essentially a rider than can be added to a basic health insurance product. It is not a substitute for either the IHP or the FFP. Critical illness insurance is a benefit policy which is what differentiates it from a traditional health insurance policy which reimburses actual medical expenses. When critical illness is diagnosed, the insurance company pays the policyholder a lump sum amount. Whether the insured spends the amount received on the medical treatment or not depends on the individuals own discretion. In most cases, to get the payout, the insured has to survive for 30 successive days after the diagnosis. No claim can be made during the first 90 days of the inception of the policy. Once paid the critical illness cover ceases to exist. Critical illness plan covers a list of 9-12 serious ailments such as kidney failure, cancer, and coronary heart disease among others. Life insurance companies also offer this rider bundled with the product. The policy term is usually longer (10-20 years) if it’s bought from a life insurer and 1-5years if it’s bought from a general insurer. Some policies currently in the market include Criticare by Tata AIG General Insurance and Critical Illness by IFFCO Tokio General Insurance among others.

    Senior Citizen Health Plan: This plan is generally provided for individuals between 60 and 80 years. The policy can be renewed for lifelong or up to the age of 90. The coverage amount is fixed. Watch out for ailments that are not covered under these plans. Critical illnesses add on may be required. Some senior citizen plans in the market include Hope by Oriental Insurance, Senior Citizen Red Carpet by Star Allied & Health Insurance among others.

    Unit-linked health plans: Health ULIP is a hybrid product serving both coverage and investment needs. A portion of the premium paid goes towards medical coverage and the balance is invested in a fund that operates just like a mutual fund. The investor can select the mix of debt and equity as per his/her need. The returns are market dependent. LIC Health Plus is an example of a unit linked health plan in the market issued by LIC.

    It is always best not to mix up your insurance and investment need. Separate out the two and go in for a pure play insurance product to serve your insurance need.

    Covers from life insurers: Life insurance companies, too, have started offering health plans. Most of these are, however, defined benefit plans i.e. the pre-specified amount which is the sum insured is paid as compensation, irrespective of the actual amount of expenses incurred. . Also, these are long-term, having a fixed premium for, say, three, five, or even 10 years.

    1 Comment

One Response to “Types of health insurance policies available”

  1. S.N.Edlabadkar said on

    Sir,
    want m ore details of senior citezens health policy.
    thanks.
    Edlabadkar

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