The pay slips this month would have given you the shock of seiing howmuch income tax you are paying. Just as a matter of interest I'm going to tell you that you can do some health investment of 15,000 for your self, spouse, children and 15000 towards your parents and if they are above 65 upto 20000 can be paid as health insurance. With the treatment in the Service Hospitals being what it is...it is imperative that you should also hold cashless hospital facility or re-imbursement of your hospital expenses. Section 80 D of IT helps you and gives you exemption of the entire amount exceeding)over and above) Rs 100,000 in section 80C.
Health Insurance Plans - Life Insurers vs. Non-Life Insurers
Do you want to know whether you require a hospitalization policy if you already have a Mediclaim policy? Do you know that 'Health Insurance' is a catch-all term that covers different kinds of health policies? Read onn to get your answers.
The media is full of stories on how non-life insurers, especially the PSU behemoths, are avoiding taking new consumers in health insurance as the health insurance business is reportedly not profitable. On the other hand, we see widespread campaigns by life insurers, including LIC, advertising the benefits of their newly launched health insurance plans. These new health insurance plans advertised so widely by life insurers have brought much needed public attention to this vital insurance segment.
As a consumer, you could be forgiven for being confused. Allow us to throw some light on this and clear this confusion.
The first aspect you need to understand is that the term 'Health Insurance' is a catch-all term that covers three distinct kinds of health policies.
There is the health policy that reimburses you the actual hospitalization cost for treatment of any disease, offered only by non-life insurers. These kinds of policies are popularly called "Mediclaim" policies (Mediclaim is actually a brand name but has now become a generic term for such policies).
Then there are two other types of health insurance plans offered - by both life insurers and non-life insurers.
One can loosely be referred to as a "Hospitalization Policy," where you primarily get a daily allowance for every day spent in the hospital. Some policies also provide higher daily allowance for stay in intensive care (the ICU). Yet others have a provision for a lump sum payment if you undergo any of the surgical procedures covered in the policy.
The other type of health insurance cover offered by life insurers and non-life insurers are the critical illness covers. Given the increased stress and strain of modern life as well as unhealthy and sedentary lifestyles, most of us are becoming increasingly prone to serious illnesses, such as cancer, heart attacks, organ failure, strokes, etc. Advances in modern medicine ensure that most of us survive these illnesses. This survival, however, comes at a cost - a serious dent in our ability to earn (salary or from business). Critical illness cover steps in here and pays off a lump sum benefit - that helps in protecting your current lifestyle.
Most life insurers have long offered these covers as riders (Riders are covers for additional risks or to enhance existing risk covers). Now these critical illness covers are also being offered as stand-alone policies to cover the risks of specific kinds of critical illness such as say, cancer. These policies are recommended, at the very least, for income earners - contracting a critical illness has a huge financial impact on their future income.
A very relevant question at this point would be:
Do I require a hospitalization policy if I already have a Mediclaim policy?
The Mediclaim policy only reimburses the expenditure incurred in the actual treatment of the disease/illness at the hospital. There are several other expenses that are typically incurred, which the Mediclaim policy does not reimburse. Expenses such as travel, attendant's lodging, loss of income (for both the patient and/or the attendant), pre-hospitalization diagnostic tests, medicines, etc. can run up to as much as 30-40% of the total cost of treatment of a disease or illness. A hospitalization policy takes care of these expenses.
Life insurance companies have done a great job in bringing this topic of health insurance to the forefront of consumer consciousness and hopefully each one of you (unlike our earlier generation which mostly left it to God) will cover your health risks adequately.
We have put together a table that gives you an easy comparison of the various features in each type of policy, and the relative advantages and disadvantages of life insurers and non-life insurers offering these products.
As you will find, the policies offered by life insurers are actually in addition to, not replacing Mediclaim policies.
Remember, it is an absolute must that you and your dependents have adequate cover on your Mediclaim policy. It cannot be replaced by any other kind of policy.
When it comes to hospitalization and critical illness policies, life insurers offer excellent products. Such policies should be a necessary part of your risk cover portfolio before you can start considering any investment strategy. The only other aspect we would advise you to re-think on is the choice of a savings-linked health product. At Apnainsurance, we have consistently advocated the need to segregate your insurance and investment needs. However, if return on investment is the only reason you will opt for such insurance policies (most people want to know what they will get back if they do not get hospitalized or do not contract any of the critical illnesses covered in their policy), you can buy these savings-linked policies, instead of avoiding health policies all together.
In conclusion,
If you intend to buy a Mediclaim policy, there is no choice but to go to a non-life insurer.
For the other two types of health insurance policies, our recommendation is to choose a suitable non-savings product offered by a life insurer. Our recommendation is based on the fact that policies offered by the life insurers cannot be cancelled during their tenure whereas non-life policies can be cancelled.
Non-life insurers normally retain the right to terminate any contract of insurance even during the tenure of the policy by sending you a 30-day notice by registered letter at your last known address. In such cases, the insurer will then refund a pro-rata premium for the unexpired tenure of insurance. This right is exercised rarely but is not unknown for corporate insurance policies.
In addition, the policies issued by life insurers guarantee coverage during the entire tenure of the policy, whereas non-life companies may not agree to renew the policy after the policy tenure ends.
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