Who do you buy that health cover from?

MUMBAI: Several life insurance companies have of late plunged into the health segment, which till recently was dominated by general insurance companies.

Among others, ICICI Prudential has launched Hospital Care and Crisis Cover and Bajaj Allianz, the Care First plan. Life Insurance Corporation, too, plans to roll out products soon.

But, are these products any different from those offered by the general insurance companies, popular as mediclaim policies?

The major difference is in the amount paid on either detection of a disease or on hospitalisation.

General insurance companies have been paying claims according to the hospital expenses that a person incurs, depending, of course, on the amount of cover that a policyholder has taken.

On the other hand, most life insurance health products pay a lump sum, irrespective of whether the policyholder has incurred those expenses on his hospital stay. In other words, if you have incurred expenses of Rs 15,000 during your hospitalisation and are eligible for a cover up to that limit, general insurance companies will pay you exactly that amount as claims.

However, a life insurance company would pay the policyholder a fixed amount, based on the plan he has chosen but irrespective of the amount of bill generated, after he is hospitalised for a specified period.

Moreover, the life insurance companies will issue a policy for a 10-20 year timeframe, whereas the general insurance companies issue them for a limited period subject to renewal every year. The catch here is that if a policyholder has been making several claims and is considered a risk, the general insurance company can deny renewing his policy.

But, in spite of these lucrative benefits, Rahul Aggarwal, head of Optima Risk Management Services says, “Health policies issued by life insurance companies are benefit policies and are not a substitute for the mediclaim policy.”

Though a lump sum amount is paid by life insurers, this comes with a cost. While the life insurers claim to have more surgeries and critical illnesses covered in their policies, they also charge bigger premiums compared with the general insurers.

Besides, since some general insurance companies have been operating in this segment for a long time, the list of hospitals in their network is also much longer compared with the life players right now. Hence, one should check if the policy covers enough hospitals in his city before committing himself.

In addition, most general insurance companies offer medical charges up to 30 days before a person is hospitalised and pay the claims if a person has been undergoing treatment at home - also called domiciliary hospitalisation. The life insurers seem to lack this facility at this point in time.

So, the take home, in Aggarwal’s words is, “They (health products offered by life insurers) work as effective top-ups when taken along with mediclaim policies. As things stand today, taking health insurance from a non-life insurer seems the better option.”