DSIJ Mindshare

Plan for maternity insurance

Expectant mothers have enough uncertainty and stress without having to worry about incurring a substantial financial burden. Women remain at risk of complications throughout the duration of their pregnancy, and need to protect themselves from unexpected health issues and related expenses. While it is true that no prospective parent wants to consider the potential health risks when awaiting the birth of a child, they would also not want to be distracted by financial concerns should any additional care be necessary for the mother or infant. Here is where maternity insurance steps in.

Until a few years ago, maternity insurance was only included in group health policies purchased by companies for their key employees and their families. More recently, however, some insurers have started selling individual and family floater policies that reimburse maternity expenses as well. If you are one of those who are planning the addition of a little one to the family, you need to understand the nitty-gritties before you buy such an independent health policy. Here are some points that should not be ignored at any cost.

For starters, health insurance plans that include maternity coverage come with a pre-specified sub-limit. For example, for a total health cover of say, Rs 3 lakh, the maternity expenses that you will be eligible for will be a much lower sum. The typical insurance cover is Rs 15000-25000 for normal deliveries, and slightly higher for c-section deliveries at Rs 25000-50000. For higher value policies with a sum assured of over Rs 10 lakh, the maternity cover could even touch Rs 90000 to Rs 1 lakh.

The pregnancy-specific insurance amount is higher in group insurance. The average sub-limit in 2011 has been in the Rs 35000-40000 range for normal deliveries and Rs 45000-50000 for caesarean deliveries. While employers are increasingly looking at different sub-limits for normal and caesarean deliveries, some of them continue to have similar sub-limits for both procedures.[PAGE BREAK]

While some policies do not cover pre- and post-natal expenses, many others cover these under group as well as individual plans. These are similar to pre- and post-hospitalisation expenses that are admissible under a standard health insurance policy, and pertain to ultrasounds, regular checkups, the doctor’s consultation fee, medicines, and so on. If individual policies fix a sub-limit of up to Rs 2500, this can go up to Rs 5000 in the case of group covers. One should take all these nuances into account while making a comparison before buying an independent health plan.

The cooling-off period is one of the biggest areas of concern for a person looking to buy an individual cover with maternity benefits in mind. In the case of group health covers, the waiting period could be up to nine months. It stretches much longer for individual policies, wherein the waiting period could range from three-six years. It is for this reason that individuals covered under group health packages may not find value in individual maternity covers, as the premium amount paid over three-six years is equivalent to the maternity coverage. The money could be put to better use elsewhere.

One point to remember is that such insurance policies offer health insurance as well, and this becomes essential if one doesn’t have a steady job with group insurance. Individual maternity policies may be more relevant from the point of view of self-employed professionals and business persons, who do not have the security of a group cover.

Also remember that such covers may not suit everyone’s requirements. For instance, a senior citizen will not need such policies. These covers are targeted at those who are likely to plan a family in the future.

If one considers only the financial implications of having children, one might end up childless. There is no doubt about the fact that having a child is very expensive. Financial experts say that a home is the biggest investment most people ever make, but they tend to forget about the cost of raising children, which is equally high. Fortunately, most people don’t base this important decision on financial issues alone.

However, as with any other decision that impacts your financial situation, it is smart to be prepared and to get into it with your eyes wide open. The changes that can accompany adding a new little member to your family can be stressful, but you can reduce the stress greatly by minimising your expenses. Maternity insurance is one of the ways to reduce the financial burden, as the related expenses may be overwhelming.

Independent insurance cover for maternity was unheard of until a few years ago. The sentiment echoed by insurance companies was that insurance is about covering unforeseen eventualities, and maternity does not really count as one. However, it is now here to stay.

DSIJ MINDSHARE

Mkt Commentary28-Mar, 2024

Mindshare29-Mar, 2024

Multibaggers28-Mar, 2024

Interviews28-Mar, 2024

Multibaggers28-Mar, 2024

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR