Types of policies Health care insurance

Health Insurance products

General Insurance companies

pure health insurance products

individual / family floater

plans

*Hospitalization exps / Domiciliary exps

*Hospital cash plan - fixed rate

*Critical illness policy

*Top up or Surplus insurance

particular disease policies

group insurance

Travel related

products

individuals & family

students

for countries

personal accident policies

Life Insurance companies

*

*Indemnity plans

*Critical illness policies

*Hospitalization expenses cum savings plan

*Hospital cash plan

*Particular disease plan

Basic Types of plans

Standard / core Comprehensive

Tailored plan Group plans

1.Health care insurance for individuals

The primary objective for an individual purchasing healthcare insurance is to secure medical protection for themselves and their family. The main benefits, for an individual, of having healthcare insurance are as follows:• To pay medical treatment expenses in case of

hospitalisation due to disease or accident.• Healthcare insurance can help to limit the insured’s out-of-

pocket expenses, protect their assets and even safeguard their future earnings.

• It takes away the worry of having to arrange money for potentially life-saving medical treatment at the last minute, giving peace of mind.

• It acts as a remedy against the absence of any risk protection measures by the Government to bear the cost of expenses related to healthcare.

Benefits for individuals • The cost of medical expenses is rising and is expected to rise

further in future.• With cashless hospitalisation, only an identity card is required

for the patient to be admitted. There is no need to pay for the treatment and then reclaim it later.

• Treatment is available in the network hospitals of the insurance company, something that is not usually affordable by the common man.

• Many insurance companies offer a 24-hour helpline which can be used to arrange an ambulance or to get information about the nearest hospitals and the best doctors, for example.

• Anyone, however healthy they are today could be caught off-guard in future by an unexpected illness or injury.

• In case of critical illness the cost of treatment may be very high and it is not always possible to meet the expenses from salary and savings.

Health Insurance scope

• The health insurer will indemnify the insured subject to

– Limit of indemnity

– Deductible

– Hospitalization expenses for more than 24 hours

– Day care procedures (List available with each hospital)

Exclusions• Any pre existing disease/ s• Any disease contracted with in 30 days

of date of inception of policy • First two year exclusions

First Year and Two year exclusionsCataractHerniaGall Bladder Stone Removalsinusitis and other related disordersHysterectomy for Menorrhagia

Scope and Coverage

Benefits

Core Benefits

In patient

Day patient

Out patient

Ancillary Benefits

Maternity

Dental

Optical

Acute Vs Chronic

Typical cover under a Health policy

Cover Details

Hospitalisation expenses Room charges (either suite, private or shared), meals and

operation theatre charges, nursing expenses, fees of medical

practitioner, anaesthetist and consultants. Parent

accommodation accompanying a child (usually under 10 or 12).

Medicine, consumables and

diagnostic expenses

Anaesthetic, blood, oxygen, surgical appliances, medicine and

drugs, diagnostic material and X-rays, dialysis, chemotherapy,

radiotherapy, pacemaker, artificial limbs and organs.

Day care treatment technologically advanced treatment that does not require hospitalisation for 24 hours or more. Eye Surgery, Lithotripsy (kidney stone removal),Tonsillectomy, Dental surgery following an accident, Surgery of Nose/Throat/Ear, Surgery of Urinary System, Chemotherapy, Radiotherapy, Treatment related to dog bite/snake bite etc.

Outpatient treatment Consultations, medication, laboratory costs, diagnostics and

physiotherapy. (initially outpatient charges were not covered

under mediclaim policies, but now a days almost all the insurers

are covering OP charges with their own conditions and terms )

Typical cover under a Health policy

Cover Details

Domiciliary hospitalisation Treatment administered at home, subject to specified conditions.

Pre- and post-hospitalisation Medical expenses for treatment up to 30 days before and up to 60

days after the hospitalisation. (This period may vary form company to

company.)

Cashless treatment Companies offer customers the facility of cashless treatment by

providing them healthcare identity cards to use in a network of

hospitals.

Free look period A 15-day ‘free look’ period is provided. Within this period if the

policyholder is not satisfied with the terms and conditions of the

policy, then they can return the policy. The company will return the

premium after deducting set charges.

Pre-existing conditions May be covered after a stated period of time (varies from company

to company, but is usually between 2–5 years).

Local ambulance service Expenses incurred for ambulance services to the nearest hospital

where emergency healthcare facilities are available.

Common Sub-limits under the Health policy (article on sub limits)

Item Limit

Room, boarding and nursing expenses provided

by hospital / nursing home including service

charges.

Up to 1% of sum insured or Rs. 5000 which ever

is lower (per day). If admitted to the intensive

care unit (ICU): up to 2% of sum insured subject

to max of Rs.10,000/- per day.

Surgeon, anaesthetist, medical practitioners,

consultants, specialist fees.

Up to 30% of sum insured per illness/injury.

Anaesthetists, blood, oxygen, operation theatre

charges, surgical appliances medicines/drugs,

diagnostic materials and X-ray, dialysis,

chemotherapy, radiotherapy, cost of artificial

limbs etc .

Up to 40% of sum insured per illness/injury.

Common exclusions of a health policy

• Any pre-existing condition (until the waiting period is over). • Specified illnesses for the first year. • Specified illnesses in the case of domiciliary hospitalisation.• Any treatment for the first 30 days from the time of inception

of policy, unless it is due to an accident. • Treatment related to HIV/AIDS. • Treatment due to abuse of alcohol or intoxicants. • Vaccination and boosters• Nuclear and war perils. • Naturopathy treatment.• Experimental or unproven treatment. • Obesity treatments • Neurological and psychiatric conditions.

Common exclusions of a health policy …2

• Self-inflicted injuries. • Self-poisoning.• Gender reassignment. • Sleep disorders.• Speech disorders. • Dialysis required for chronic renal failure. • Dental treatment not requiring hospitalisation. • Infertility treatment • Treatment arising from, or traceable to, pregnancy and

childbirth, including caesarean.• Birth control devices or pills.

Contd……..

Common exclusions of a health policy …3

• Treatment that is purely diagnostic in nature with no positive existence of any disease.

• Treatment of congenital external disease/defects/anomalies.• Treatment that is mainly cosmetic in nature.• Spectacles, contact lenses and hearing aids.• Treatment taken from a person not registered as medical

practitioner.• Mobility aids, prostheses and corrective devices.• Organ transplantation • Injuries arising from hazardous pursuits (such as diving).• Services or treatment in any home, spa, hydro-clinic,

sanatorium or long-term care facility.• Vaccinations and medical certificates, including examinations

for employment or travel.

Expenses not covered in the policy

• Admission/Registration Charges• Telephone Charges• Attendant’s Changes• Home Visit/Nursing Charge – at residence after discharge• Assistant fee/Follow up Charges in advance• Thermometer Charges• Container for Specimen/Disposable Bag Charges• Admission Kit• External Surgical Aids: Lumbo‐Sacral/Collar belt/ Knee cap/Knee

brace/Walker/Hot water bag/Baby kit/Urine pot/Traction kit/Folding commode etc.

• Inhaler/Nebulizer• Diet Charges• Special/Protein diet/Health drinks unless prescribed by the Doctor• Documentation/Folder/Stationery/In Patient chart Charges• Surcharge

Ancillary Benefits

• Ancillary benefits are outside the scope of basic and standard plans (and available for additional premium), but are usually incorporated into comprehensive plans.

1. Maternity

Charges made for pre-natal, childbirth and post-natal treatment of a female insured. General benefits structure include:• Normal delivery: ante-natal and post-natal care.• Caesarean delivery: ante-natal and post-natal care.• Legal abortion/miscarriage.

Ancillary Benefits/2

• Dental Dental plans vary enormously in what they cover; a comprehensive plan might include:• Diagnostic services, including routine examinations and x-

rays.• Simple restorative care, including amalgam (silver filling).• Crowns and jackets.• Treatment of disease, gum abscesses and root canal

therapy.• Oral surgery.• Bridges and dentures.• Orthodontia.

Ancillary Benefits/3

OpticalThis refers to vision care and a comprehensive plan might include:

• Eye examination

• Lenses

• Frames

• Contact lenses

2. Critical illness policies

• In a Critical illness insurance the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the critical illnesses listed in the insurance policy.

• The policy may also be structured to pay out lump sum amount or regular income and the payout may also be on the policyholder undergoing a surgical procedure, for example, having a heart bypass operation.

Common list of critical illnesses

• Alzheimer’s disease – resulting in permanent symptoms.• Blindness – permanent and irreversible.• Cancer – excluding less advanced cases.• Coma – resulting in permanent symptoms.• Deafness – permanent and irreversible.• Heart attack – of specified severity.• Kidney failure – requiring dialysis.• Loss of speech – permanent and irreversible.• Major organ transplant.• Multiple sclerosis – with persisting symptoms.• Paralysis of limbs – total and irreversible.• Parkinson’s disease – resulting in permanent symptoms.• Stroke – resulting in permanent symptoms.• Third degree burns – covering 20% of the body’s surface area.• Traumatic head injury – resulting in permanent symptoms.

With increasing competition, the scope of protection offered by these policies has steadily extended in recent years.

Survival period and waiting period

• The policy may require the policyholder to survive a minimum number of days (the survival period) from when the illness was first diagnosed.

• The survival period used varies from company to company, however, 28 days and 30 days are the most common survival periods used.

• In addition to this a 90 – day waiting period is applicable, i.e, Any illness within 90 days from start date of policy will not be covered.

3.Travel insuranceTravel insurance is intended to cover medical expenses, travel related accidents and losess, and other losses incurred while traveling. ( Domestic as well as Abroad)

Insurance can be purchased for many different types of travel, including:

• Individual

• Family travel

• Student travel

• Sr Citizen travel and

• International travel

Available for all ages between 3 months – 70 years and senior citizens between 71 to 85 years

Cover trips from as short as 1 day to max of 360 days

Typical cover (healthcare) available under a travel insurance policy

Cover Details

Healthcare cover

Emergency medical expenses Medical costs incurred due to illness or accident

including medically necessary and prescribed

emergency evacuation. It covers out-patient, in-

patient, medical aid, therapies and diagnostic tests

as described in the policy schedule.

Repatriation in case of medical

emergency

Expenses involved in repatriation to the insured’s

home country in case of medical emergency.

Repatriation of mortal remains Expenses of repatriating the remains of the insured

back to their home country, in the event of their

death overseas.

Dental expenses Dental emergency expenses following an accident.

Hospital cash Daily allowance payable, as stated in the policy.

Personal accident Compensation paid in case of death or permanent

total disability caused by an accident.

Typical cover (non - healthcare) available under a travel insurance policy

Non-healthcare cover

Flight delay

Compensation if the aircraft is delayed for more than

twelve hours beyond the original scheduled

departure time.

Trip cancellation Compensation for loss of personal accommodation

or travel charges following the necessary and

unavoidable cancellation of the trip due to death,

serious injury or sudden sickness of the insured or a

family member.

Loss of passport Expenses incurred in obtaining a replacement for a

lost passport.

Typical cover (non - healthcare) available under a travel insurance policy

Non-healthcare cover

Loss of checked-in baggage Compensation for the permanent loss of checked-in

baggage.

Delay of checked-in baggage Compensation for reasonable expenses incurred for

the purchase of toiletries, clothing and medication

due to the delayed arrival of checked-in baggage,

where the delay is for more than twelve hours.

Hijack distress allowance In the event of the hijack of the air or sea common

carrier in which the insured person is travelling

whilst on the trip abroad during the period of

insurance. An allowance will be paid for each day of

the hijack up to the limit specified under the policy.

Exclusions of travel insurance

• Self-inflicted injury, suicide. • Being under the influence of alcohol or drugs.• Participation in any criminal act.• AIDS/ HIV.• Treatment of nervous and mental problems. • Participation in hazardous pursuits.• Civil or foreign war • Pre-existing conditions except in case of life-threatening

situations • Radiation, nuclear weapons induced Sporting activities • Expenses arising out of loss of valuables, money, securities

and tickets • Loss of passport in public place

Personal Accident policies

Accidents do happen. In India there is an accidental death every 2 minutes.

Personal accident insurance covers the risk of bodily injury arising directly from an accident that was caused by external, violent and visible means and results in death or disablement.

A term plan can only help in death and a health plan can help in case a person is hospitalized, some of these policies also offers accidental riders, but these riders are not as comprehensive as standalone Personal Accident Insurance policies have .

The premium of accidental policy does not depend on age .

It would depend on the working conditions and nature of person’s job

Scope and coverage

Other features

• Some companies covers claims arising out of Terrorism or acts of Terrorism

• No health check-up required for policy issuance

• Worldwide coverage of the policy

• It gives coverage starting from 5 lacs to 50 lacs

• Free lookup period of 15 days

• 5% per claim free year to a maximum of 50%.

Exclusions

• Any pre-existing disability, condition or any complication arising from it; or

• Suicide, attempted suicide or intentionally self-inflicted injury or illness, mental or nervous disorders or

• Participation in illegal activity ./ criminal activity;

• AIDS/HIV; and

• Hazardous pursuits.

• Influence of intoxicating liquor or drugs

• Military service or operations

Non traditional plans When doors of privatization opened three things happened,

1. The concept of ULIP was introduced

2. Traditional agent has suddenly many more work options and could have move from company to company

3. New channels of distribution – corporate agency tie ups

Non traditional plans • A ULIP (Unit Linked Insurance Plan) is a life

insurance policy which provides a combination of risk cover and investment –market related .

risk cover

various charges

investment

Different charges

• Mortality Charges

These are charges to provide for the cost of insurance coverage under the plan.

• Premium Allocation Charge

This is a percentage of the premium appropriated towards charges before allocating the units under the policy.

• Fund Management Fees These are fees levied for management of the fund(s)

. Policy/ Administration Charges

• Surrender Charges

• Fund Switching Charge

• Service Tax Deductions

ULIP products

• ULIP has addressed and overcome several concerns that customers had about life insurance –

Liquidity

Flexibility

Transparency• ULIP’s are into

– Retirement /pension planning

– Health plans

– Lots of investment plans

– Children plans

– Marriage and education plans

How ULIP concept works?

• The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV).

• The policy value at any time varies according to the value of the underlying assets at the time.

• The returns in a ULIP depend upon the performance of the fund in the capital market.

• ULIP investors have the option of investing across various schemes, i.e, diversified equity funds, balanced funds, debt funds etc.

General Description Nature of Investments Risk Category

Equity Funds Primarily invested in company stocks with the general aim of capital appreciation

Medium to High

Income, Fixed Interest and Bond Funds

Invested in corporate bonds, government securities and other fixed income instruments

Medium

Secured Funds Investment in govtsecurities, bank deposits and government securities

Low

Balanced Funds Combining equity investment with fixed interest instruments

Medium

Health Savings Plans by Life Insurers

• With ULIPs regaining lost popularity, life insurers have gone one step ahead by providing Unit Linked Health Care Plans or Money Back Health Insurance Plans, combining investments and health insurance.

• The popular plans in this category are ICICI Prudential's Health Saver, Birla Sunlife's SaralHealth and LIC's Health Protection Plus.

Health Savings Plans (HSPs):

• Health Savings Plan offer a blend of an investment account as well as a health cover. Under this, a part of the premium is allocated towards a savings or investment account, while the rest is utilized towards offering a protective cover.

• While the exact percentage of allocation towards savings or investments and health insurance will vary from company to company, typically a health savings plan would allocate 30-40% of the premium for savings.

ULIP - Health plans

So far, few Indian life insurers, such as • LIC – Health plus, health protection plus

• ICICI Pru life

• Reliance Life• HDFC Life

innovated with health plus savings products. Health benefits: the LIC’s health protection provides a fixed ‘per day’ hospital cash benefit where as ICICI PruLife has an indemnity based health cover.

Specific Disease policies • Changed requirements of the people to

manage the high costs associated with the treatment.

• Needs to be offered separately – involves complexity – different terms and conditions

Health plus life - combi product

• Promoted by both life and non-life companies/ stand-alone insurance companies

• Mandatory to have a MOU between the insurers

• Under writing of respective portion should be carried out by respective companies

• Premium sharing and claims settlement will be done as per the risk shared by each companies.

• Future Generali, Reliance life are offering such polices in the market

Group Insurance introduction

• Insurance plan for a group of Individuals • It covers group of people against loss of life,

health or disability• “Power comes in numbers”• Type of coverage available all over the world

might vary for different states and different countries

Importance of Group Insurance

• Increasing life span resulting from better health care

• Increasing prevalence of diseases relating to our dietary and behavioral habits, known as life style diseases.

• The rising incidence of such diseases especially among employees in the organized sector, make both public sector and private sector.

• Hence employers look group insurance as an important employee benefit.

• After Life Insurance nationalized and LIC of India came into life insurance business the importance of group insurance recognised

• Today all the private life insurance companies are also having different group insurance plans with various unique features.

• Among private insurers, ICICI Pru, Bajaj Allianz, HDFC Standard and Birla Sunlife grabbing good business in the group insurance category. However, LIC retained its dominant position with 80% market share

largest group insurance policy

LIC vs INFOSYS• LIC has signed the largest group insurance policy with

Infosys Technologies worth Rs 24,000 crore. The policy covers 97000 employees of Infosys.

• Depending on the rank the employees are eligible between Rs 20 -80 lakh in the event of death of the employee. The cover of Rs 10 lakh has been given in the policy in the case of accident.

• The Infosys-LIC association is not new and has been in existence since the year 2002. Earlier in that year LIC covered just 12,000 employees

• LIC has group insurance deal with Hindustan Aeronautics (HAL) that covers 52,000 employees. Its Wipro deal covers 60,000 employees.

Group insurance – Fundas

• It is a contract between the Insurer and the representative of the group who is called “Master Policy Holder”

• Group policies are normally one year renewable contracts – hence premium varies every year due to changes in the group

• Experience rating system

• Group insurance plans may be of two types: contributory or non contributory.

Fundamentals continues …

• “A group should consist of persons who assemble together with a commonality purpose or engaged in a common economic activity like employees of a company.”

• It should be a homogeneous group of persons formed already.

• No group should be formed with the main purpose of availing insurance……Guidelines of the regulations issued by IRDA.

• There must be minimum number of members in the group.

• Sufficient new members must enter the group periodically.

Types of coverage

Medical cover

Critical illness

Accident cover

Health insurance

Pension Cover

Life cover

Employees benefits offered by companies

StatutoryVoluntary

Pensions Leave encashmentSavings policy Life insurance benefitsPersonal accident

benefitsMedical & health insuranceOther perks

Workmen’s Compensation Act Employees State Insurance ActEPFEDLIEPSPayment of Bonus ActPayment of Gratuity Act

Employees benefits that are supported by group insurance

StatutoryVoluntary

Pensions Leave encashmentSavings policy Life insurance benefitsPersonal accident

benefitsMedical & health insuranceOther perks

Workmen’s Compensation Act Employees State Insurance ActEPFEDLIEPSPayment of Bonus ActPayment of Gratuity Act

Eligible groups for taking Group Insurance

Employer -

Employee

Creditor vsDebtor

Professionals

Others : rural, urban

weaker sections

Labor Union

•Group policy is taken by the employer for the benefit of the employees either as a welfare measure (as a model employer) or to meet as legal liability such as Gratuity liability, or liability for superannuation benefits.

•Any scheme can be either contributory or non-contributory. •Normally no evidence of health of the members joining the scheme is called for. Other rules are: (a) the employee should not be absent from duty on

medical grounds as on the date of commencement of the Scheme

(b) the employee should not have availed leave on medical grounds for one week or more during the last six months or one year as per the practice of the Insurer..

In some schemes all the employees are admitted into the scheme irrespective of their health condition.

Employer –employee

Creditor – Debtor

• The contract owner in these plans is the creditors, such as bank, a small –loan company, a credit union.

• If debtor dies or become disable, the insurance proceeds generally paid to the creditor to liquidate the indebtnesss that provided the basis for coverage rather than to the individuals who are insured or beneficiaries.

• Debtors usually must be under a binding irrevocable obligation to repay the indebtedness for coverage to be effected.

Professionals

These are homogeneous groups like

Doctors, Lawyers, Engineers, Teachers, Accountants, Journalists, and Architects Etc

Labor Union Groups

• Members of labor unions may be covered under a group contract issued to the union itself.

• It is common, however, for payment to be made from funds partially contributed to the union by members specifically for their insurance and partially by the union from its own funds. In some cases the union pays the total premium from its own funds.

Others • Rural sector : Milk producers, Agriculturists such as cotton growers,

groundnut producers, Handloom weavers, toddy tapers, beedi rollers.• Urban sector : Fishermen, taxi & auto rickshaw drivers, rickshaw

pullers, tailors, barbers, dhobis, manual labourers such as constructions workers, quarry workers, etc.

• Other weaker groups : Self employed women, Blind, physically handicapped, leprosy and other disabled persons, Forest labourers, transport workers, workers of small industries such as gunny bag workers, leather workers, etc. Assistants in small shops and establishments

• RSBY

Health Insurance

• Janshreebimayojana

Life insurance

• ShikshaSahayogYojana

Scholarship

• Aam Admi Bima Yojana

Land less house hold

Major Differences Between Group and Individual health Insurance

Benefit Individual Group

Pre check individual health insurance requires all applicants to undergo medical examination before their policy can be approved.

Group life insurance provides a guaranteed amount of coverage which means no medical examination is necessary to qualify for the coverage

pricing Individual health insurance is rated based on the applicant sole lifestyle, medical history, and social affiliations

Will be rated based on an experience approach. The rate you need to pay will not be predetermined by your health condition but the assessment of the entire group which you belong to.

Major Differences Between Group and Individual health Insurance/2

Benefit Individual Group

Billing and Administration Systems

individual health insurance is managed solely by the policy holder

Most insurance companies which provide group insurance policies hire a particular administrator who handles the account of a specific group. The administrator monitors the payment and benefits claims of each member of the group.

Scope of coverage

individual insurance which requires a reassessment of entire application fro inclusion.

The increase in the scope of coverage for group health insurance is easier. need to present legal documents if wish to include wife, child or parents into the policy.

Exclusions Can be covered by paying an additional premium.

Included some of the exclusions like maternity, dental, optical, pre existing disease etc

Healthcare insurance productsSummary

– Individual and Group Floater Indemnity products– Critical Illness Benefit products– Hospitalization Benefit and Surgical Benefit products– High Deductible and Top-Up covers– Micro health insurance products– Overseas travel and International comprehensive coverage– Specific disease products- Cancer, HIV, Diabetes, cardiac etc– Products for different age groups- Senior Citizens, Women– Products with outpatient coverage in some form– Linked and Unlinked Health Savings Products etc.

Further ideas …….

• Currently, non-life insurers and stand-alone insurers are allowed to design and sell individual products of falling under the short term category i.e max up to 3 years.

• This does not offer a level playing field

• Insurers should think and be allowed to offer health savings product including indemnity benefit.

• ANY MORE?????