Got a mediclaim policy? Add a surgical assistance plan

The trauma of surgery is bad; the trauma of not having the money to pay for it is worse. In such cases, surgical assistance insurance could be of help.

In my last column, I mentioned Seema’s traumatic experience when her husband Bhushan needed heart surgery. Luckily, Bhushan had taken a critical illness cover, which saved the day for them.

Seema realised upon understanding critical illness insurance policies that these cover just a few illnesses. Surgical assistance insurance policies, however, cover a lot more situations and Seema wondered whether such policies could be more useful for the couple.

Surgical assistance insurance provides a payment in a situation where a surgery needs to be done, provided that is covered by the policy or a rider. This policy specifies the surgeries it covers. Most policies here are of the non-indemnity type, wherein a certain sum of money will be paid out irrespective of the amount spent.

The salient features of these products are: 
1.  Policy covers specific surgical conditions which are clearly enumerated. From less than 100 to about 1,000 surgeries are covered, depending on the policy. Due to this, the premium varies to a great extent.

2.  Policies can be stand alone from life / general insurance companies or as rider that could be attached to life insurance policies. All policies/ riders of this type come from life insurance companies.

3.  There is tremendous variation in the number of surgeries covered, coverage tenure, sum assured permitted and benefits available. Some policies cover up to a specific term; others cover up to a particular age and some offer a combination of the two.
 
4.  In some cases, the sum assured increases by a specific percentage (5 per cent in two instances) till it reaches 150 per cent of the initial sum assured. In other cases, it remains static throughout.

5.  Policies here are mostly the non-indemnity kind (a specified amount is paid as per policy terms, irrespective of money spent).

6.  Surgeries are generally classified by the complexity into grade 1, 2, 3, 4 etc. The more serious the surgery, the higher will be the charges. In case of lumpsum payouts, it will be higher for a complicated surgery. For instance, it will be more for open-heart surgery than for hernia.

7.  Some policies also give a daily hospital benefit up to a certain number of days of stay in the hospital. Similarly, ICU charges are also paid for a certain number of days in certain policies.

8.  Some policies give convalescence benefit if the patient has spent at least a certain number of days in the hospital.
 
9.  There are exclusions as well. Surgeries traceable to pre-existing illnesses, within waiting period, surgeries of a cosmetic nature not necessitated by an accidental injury, etc will not be covered.
 
10.  Section 80D benefit available up to Rs15,000 on premiums paid against this policy.

Analysis & deliberation

This class of policy is good as an additional policy, over and above the regular medical insurance, because it covers only specified surgeries and not general hospitalisation. Hence, this should be considered after medical insurance is in place. Again, as opposed to a critical illness policy (most of which will involve some surgery), a surgical assistance policy will typically be costlier as the number of surgeries covered is much wider.

When evaluating this class of policy, it is necessary to look at the premiums and the number of surgeries covered — for this varies in a wide range, from less than 100 to about 1,000. Higher the coverage, higher would be the premium.

Also, some policies impose a condition that in a lifetime, one can claim up to 3 times the sum assured. Others have overall limits up to which claims will be accepted in a year and during the policy tenure. One needs to consider all these properly before selecting a policy.

On learning about surgical assistance, Seema felt they would have been better served with such a policy.

But how many policies can one take? There will always be some residual risk that will be uninsured. As long as bulk of the risk has been farmed out, it should be fine. For, there is a life to live and expenses beyond premiums.

The writer is a certified financial planner who runs Ladder 7 Financial Advisories.