The incidence of chronic diseases has been on the rise all over the world in the past few years. People have been spending large amounts of money treating various kinds of diseases. The cost of medical treatment too has been ever rising. This is where medical insurance can come handy. By spending a small sum on a regular basis in a health-care policy, you can undergo medical treatment assured that your precious savings are not affected by the cost of treatment.
The peace of mind alone could help you to heal quicker!

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 me 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.
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.

Herein below is shown an easy comparison of various feature 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.

 
1-Main Benefits:

• Mediclaim- Reimburses actual expenditure incurred during hospitalization.

• HP- Pays daily amount of hospitalization.

• CIP- Payment of lump sum on diagnosis of a critical illness covered in the policy.

2-Benefits available more than one policy of same type

• Mediclaim- NO, claim restricted to actual expenditure incurred.

• HP- Yes, you can claim under all of them.

• CIP- Yes, you can claim under all of them.

3- Type of coverage

• Mediclaim- Reimbursement whether surgery or not.

• HP- Coverage could include for removal of kidney and/or thyroid gland, open heart surgery, removal of brain tumor, hernia, uterus removal, tennis elbow release etc.

• CIP- It could include cancer, organ failure, chronic lung disease, coronary artery bypass surgery, kidney failure.

4-Who offers ?

• Mediclaim- Only non-life Insurance Co.

• HP- Both life & non-life Insurance Co.

• CIP- Both life & non-life Insurance Co.

5- Is savings element* included ?

• Mediclaim- NO

• HP- Only life insurance Co. may offer

• CIP- Only life insurance Co. may offer

6- Can insurer cancel the policy?

• Mediclaim- Yes

• HP- Non-life insurance can & life Insurers typically cannot.

• CIP- Non-life insurance can & life Insurers typically cannot.
7- If hospitalization out of India

• Mediclaim- Normally not covered

• HP- Sum policies will pay.

• CIP- Not applicable because this policy is not dependent on hospitalization.

8- Useful For

• Mediclaim- To meet the actual cost of hospitalization for any covered disease.

• HP- To meet the other incidental expenditure arising from hospitalization. If the policy has major surgery benefits it may also help in meeting a part of the loss of income due to illness.

• CIP- To get a lump sum benefit from the income which will help in meeting the loss of income arising from contracting the critical illness.

9- What will not be covered

• Mediclaim- Incidental expenses, post hospitalization expenses after a specified period, temporary or permanent loss of income due to disease.

• HP- Actual cost incurred in hospitalization especially where no surgery is involved.

• CIP- Actual cost of treatment.
  * The savings element in any insurance policy is essentially paid by you - translating into a larger premium. A part of this premium is deducted upfront and only the balance is invested. You do receive the returns on the portion of the premium amount invested.

The comparison above on the various kinds of policies is as commonly understood every insurance policy is a legal contract & has several exclusions and benefits that will be unique to it.
The comparison given here cannot be and is not meant to be an exhaustive comparison of all types of policies. It is only meant to give a broad idea of the kinds of health insurance policies that are available in the market.

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, my recommendation is to choose a suitable non-savings product offered by a life insurer. This 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.
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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This entry was posted on Thursday, February 19th, 2009 at 12:20 am and is filed under Mukesh Dedhia's published articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.