Personal Finance

LIC Jeevan Arogya - Better medical cover for your parents

Suresh Parthasarathy | Updated on June 18, 2011 Published on June 18, 2011

Escalating medical expenses are a cause for concern not only for the elderly, but also for those in their middle age. As health awareness increases not just regular insurance companies, but life insurance companies too are coming up with new health policies.

LIC has recently launched Jeevan Arogya, a non-linked health insurance plan that provides health insurance cover against specified health risks, with benefits such as daily hospital cash benefits, major surgical benefits and day care procedure to meet medical emergencies. In the event of any major illness suffered by the insured, the plan allows waiver of premium for the subsequent one year.

What's on offer

* Guaranteed coverage for the policyholder up to the age of 80 and his family including parents and parents-in-law against medical expenses incurred due to hospitalisation.

* Financial protection in case of hospitalisation and surgery

* Automatic increases in cash benefits every year at 5 per cent

* Fixed benefits to the individual irrespective of the cost incurred

* No-claim benefit of five per cent, for three claim-free years

* Flexible premium payment options with rebates and discounts for higher premium

* Sum insured increases by 5 per cent a year, to the maximum limit of 1.5 times of the initial sum insured.

* Fixed premium for first three years, irrespective of the claims. Age at entry is the base for all future premiums till the policy is in force.

* Riders such as term insurance and accident benefit. The overall cover under the plan inclusive of the two riders is Rs 10 lakh.

* Tax benefits under section 80D available for all health insurance.

How it works

Individuals can choose the amount of daily hospital cash benefit (HCB) as per their estimated requirements. The plan allows a minimum of Rs 1,000 per day and maximum of Rs 4,000 per day to cover the daily cost of hospitalisation. For instance, for a family of six with parents above 70 and principal insured at 40 for a sum insured of Rs 2 lakh each the premium will works out to a maximum of Rs 31,502(before any rebate).

Daily hospital cash benefit: If the principal insured or any of the persons covered under the policy are hospitalised due to accident or sickness and stay in hospital for more than 24 hours in non-ICU ward an amount equal to HCB will be paid for 30 days in the first year and 90 days from the second year. In the event they stay in an ICU an amount equal to twice the HCB will be paid for 15 days in the first year and 45 days from the second year. This will be within the overall limit for each year.

Major Surgical Benefits (MSB): 100 times of the HCB or applicable daily benefit with an increase by five per cent from the second year onwards. For instance, if the HCB is Rs 2,000 in the first year, it will increase by five per cent to Rs 2,100 (daily cash benefit) from the second year onwards. MSB benefit will be available for minors also. The total number of surgeries covered under the plan is 140. The sum insured is payable based on the categorisation of surgery and it varies from 40-100 per cent.

Day Care Procedure (DCP): In the event of the insured undergoing for any of the 140 day care procedures LIC has specified, the amount paid will be equal to five times of the daily benefit and it will be allowed three times a year and 24 times for whole of the policy.

Other surgical procedures: In the event of the insured undergoing surgery not listed under the above options, and is hospitalised for more than 24 hours then two times the daily cash benefit will be paid for 15 days in the first year and 45 days in the subsequent years.

Quick cash facility: An advance of 50 per cent of the major surgical amount will be paid to the insured for the specified surgeries. To avail the benefit insured has to inform the LIC or the facilitator for the claims. After the latter processes the request LIC credits the eligible amount to the policyholder's bank accounts.

Our take

With health insurance plans netting large losses for general insurance companies, they have imposed many restrictions on insuring older family members. Hikes in premia too have been steep. Individuals finding it difficult to include their parents/parents in-law in their existing policies may find this plan suitable to their needs. However, LIC's Jeevan Arogya has a cap on entry age at 75.

You should also note that a health policy offered by life insurance companies can only supplement health policies offered by general insurers. The health policies are an indemnity plan - the hospital expenses are reimbursed up to a maximum sum insured without any limitation. The health cover offered by life insurers are benefit plans and the cover is restricted by various conditions.

The advantage under the Jeevan Arogya is that pre-existing diseases are covered after two years, against the usual four-year waiting period . However, the premia during the initial years are higher compared to the top-up plans offered by the general insurer. But an individual signing up for this plan at an early age has the potential to save on premium later .

This plan is ideal for self-employed professionals, people with a family history of critical illness and for those above 65 who do not have a medical cover.

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