Health Plans With Assured Returns - More Bang For Your Buck

Indians tend to be reluctant to pay insurance premiums without the promise of any tangible benefits. This is the reason why insurance-cum-investment plans are popular in the market, despite the availability of cheaper alternatives like term cover. Health covers (which are similar to term insurance) too, don’t find many takers in India, since many individuals believe that buying a health cover doesn’t make sense while one is healthy. Another factor that works against such policies is that the health cover premium seldom helps an individual exhaust the Rs 15000 deductions that can be claimed for health insurance under section 80D of the Income Tax Act. This is why health insurers have now started designing products that actually cater to customers’ needs.

The products in this direction include unit-linked health covers, and OPD (outpatient department) products that extend cover to treatments that do not require 24-hour hospitalisation, or are not included under ‘daycare’ procedures. Unit-linked health plans look to address a specific need of policyholders, i.e. paying for policies that don’t yield any benefits if claims are not made. OPD policies cover consultation, dental and maternity expenses, subject to limits, which address key exclusions in the standard indemnity-based Mediclaim policies. Such plans also appeal to individuals who want to maximise tax breaks on health insurance premiums.

With a steep rise in OPD expenses, and the majority of health policies not covering OPD expenses, such covers have become immensely useful for individuals. Comprehensiveness is the key proposition of such policies. Other schemes, like Bajaj Allianz’s Health Card, allow policyholders to avail discounts on OPD consultations, pathological tests, eye-care centres and dental clinics even if they do not make claims on the health policy in a particular year.

The basic working of OPD policies is similar to that of regular indemnity-based health plans. Hospitalisation-related expenses are paid for, as are pre and post-hospitalisation expenses, and those on daycare treatments for critical illnesses. Likewise, pre-existing illnesses are covered after a waiting period of two to four years, depending on the policy. The key difference, as mentioned earlier, lies in the coverage of ailments/treatments that are excluded from standard health policies, namely dental treatment, pregnancy-related expenses, diagnostic tests, pharmacy bills and so on. On production of the necessary bills pertaining to such treatments or consultations, the insurance company will reimburse the amount spent by you, subject to the sub-limits.

Once you are sure about the OPD policy’s utility value, the next step would be to compare the various offerings in the market. Expenses that are not covered, sub-limits (extent of coverage within the overall sum insured), and the premium to be paid should be the key parameters to look at while selecting a policy. Some policies, for instance, may cover maternity expenses only under the family floater plan, and not under individual plans. The same is the case with sub-limits too. The maximum benefits on maternity policies may be just Rs 100000, even if you have opted for a cover of Rs 50 lakh. Besides, note that all policies will cap the number of admissible OPD consultations and health check-ups.
Unit-linked health plans aim to create a corpus for you, apart from covering your yearly health claims, if any. At maturity, your fund value will be handed over to you. In the event of the policyholder’s demise prior to maturity, the fund value is passed on to his/her nominee. Two of the popular unit-linked health plans are LIC’s Health Protection Plus and India’s First Life Money Back Health Insurance Plan. While making a decision, you should take into account the sub-limits on the doctor’s fee, room rent, nursing charges and so on, along with charges deducted from your premium.

If a corpus for the future is of importance, you need to carry out a cost-benefit analysis to ascertain whether the high charges built into unit-linked schemes are proportionate to the promised benefits. However, insurance should not be confused with investments, where you expect a steady return on investments made. One should think of insurance as a necessary risk-management mechanism, which does not add to your assets or income, but safeguards your existing assets and saves them from unforeseen circumstances at relatively minuscule costs. Such kind of policies can make sense for self-employed professionals (who do not get corporate cover, but would like comprehensive coverage) as well as for families looking to maximise their savings under Section 80D. Those who need cover for dental and maternity expenses can also go in for these plans.