Mix ‘n' match health policies

With health insurance, as with everything else, choice often doesn't help. Choosing between plans is always an issue for individuals and one key question that crops up frequently is whether to buy health insurance from a general insurer or from a life insurance company.

Policies by general insurer

Health policies from general insurers are indemnity plans — hospital expenses are reimbursed up to a maximum sum insured.

The insurer offers individual two options to choose from – reimbursement and cashless facility.

Under the re-imbursement option, individuals meet hospital expenses from their own sources and recover the same from the insurer.

Whereas in cashless facilities, hospital bills are settled seamlessly just by swiping the health card issued by the insurer.

With ever increasing disputes between hospitals and the insurance companies, cashless faculties are running into rough weather.

With general insurance companies settling more claims that they projected, a ‘co-payment' feature was introduced to restrict payouts on medical claims.

Under co-pay 20 per cent of the bill is paid by the policyholder and the rest is settled by the insurer. However, the premium outgo of such policy comes at discount to plain vanilla policies.

Pre-existing diseases are covered after a few years and the general norm is a four-year waiting period.

There are a few diseases that automatically lead to other complications and claim settlements for such conditions usually becomes an issue during the waiting period.

Health covers from life insurers

The policy is renewed every year and the premium is charged based on the age and claim experience of the insurer. The renewal of policies is allowed up to age of 80 year, however, fresh policies for senior citizen are declined.

The health covers offered by life insurers are benefit plans and covers are restricted by several conditions.

In life insurance, there are options such as daily cash benefits, day care procedure and riders such as critical illness and accident cover. These plans offer defined benefits — that is a fixed sum. At the time of buying the plan policyholders can decide the benefits they wish to avail.

Unlike Mediclaim policies, health policies from life insurers pay the entire sum insured for critical illness cover, irrespective of the expenses. For surgical benefits, the sum insured is payable based on the categorisation or grade and not at actuals.

How they differ

The main difference between health policies from general insurers and those from life insurers is that the former are based on re-imbursement and the latter on defined benefits.

General insurance companies pay for day-care expenses incurred for advanced surgeries and procedures that require less than 24 hours hospitalisation including dialysis, radiotherapy and eye surgery.

Whereas in most cases life insurers insist on 24-hour hospitalisation to avail defined benefits.

Life insurance companies don't pay for the domiciliary treatment and some of the exclusions are circumcision and cosmetic surgery.

Most general insurers offer cover up to Rs.10 lakh. But life insurers offer critical illness as a rider benefit even beyond that.

With life insurers you are entitled for a claim made overseas, provided the diagnosis and treatment occurs from the specified list of countries mentioned in policy document.

Our take

Often individuals ask whether its advisable to construct health portfolio to meet hospital expenses by buying stocks of pharma and hospital companies or saving in small savings to meet the hospitalisation cost.

We think it is best to manage medical risks with a mediclaim policy adding on health covers from life insurers to handle any additional costs.

It is better to take health insurance as a supplement to mediclaim to meet attendant expenses and loss of income for self employed on account of not able to go for employment with support of daily cash benefit.

The advantage of buying a formal health cover from an insurance company is that when some one is sick or there is an emergency, one has very little time to arrange adequate care of the patient and financing for the hospital bills. It is best to take care of the financial part in a hassle free way, so that one can be available to take care of the near and dear ones in crisis.

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