The table indicates a premium for a 30-year-old non-smoking male. It is a 30-year term plan with a Rs 50-lakh sum assured and Rs 25-lakh critical illness cover.
Parizad Patel, 33, was facing a dilemma — should he buy a basic health cover or a comprehensive policy? The problem just got compounded with life and non-life insurers offering competitive health products.
According to the table, if a person takes two separate policies (pure cover and additional critical illness), his total outgo on the premium in 30 years would be Rs 11.83 lakh. This compares with Rs 4.43 lakh had he taken an offline policy from a life insurer, with the same protection and equal sum assured.
|HOW THEY STACK UP
Health plans by life insurers are largely savings-based products (Rs)
|Online Term Plan|
|Critical Illness Plan|
|Offline term with Critical Illness rider|
|SBI Life’s Smart Shield||14,785||4,43,550|
|*The differential between the total annual premium on pure cover plus additional critical illness and the annual premium on the offline policy
Health plans from life insurers are long-term, with lock-in period of three years. Usually, premium for an individual rises in the block of five years, depending on the age bracket (31-35, 36-40, etc). But, with general insurance products being renewed every year, any change in the insured’s health may push up the premiums.
Cautions Akshay Mehrotra, chief marketing officer, Policybazaar.com, “Even if some health plans offered by life insurers turn out cheaper, one must look at these critically, as health is of utmost importance.” Health plans provided by life insurers are largely savings-based products that offer lump sum compensation for critical illness. Generally, it is not cashless. Payment is reimbursed on submission of bills.
Also, health insurance portability is not allowed for health products sold by life insurers. Hence, if one needs to change his general insurer, he will have to buy a separate policy. Also, the health plan here is investment-based and sold either as a unit-linked insurance plan (Ulip) endowment or money-back policy.
Experts say one should not mix investments with insurance. One should initially buy a standard health insurance policy that provides the cover for hospitalisation one is looking for. One should buy an adequate pure protection plan (usually a cover of Rs 5 lakh in a metro) and invest the remaining amount in a highly-liquid fixed income product.
This will help pay off miscellaneous expenses during an emergency, a facility a Ulip may not offer. One can also buy a critical illness cover if the risks related to his health are higher. “It’s best to buy the product from a company that has expertise,” added Birender Ahluwalia, director, sales and distribution, Max Bupa.
The upside to buying a plan from a standalone health insurer is it offers life-long renewal on mediclaims. This facility will help ageing customers, because when their policies go for renewals, these cannot be declined.
Health plans from general insurers are less flexible. They have caps on sub-limits with room rate conditions, which may raise the overall premium.
“One should be careful in reading the fine-print while buying plans from life insurers, as those products are rider-driveno,” suggests Shreeraj Deshpande, head, health insurance, Future Generali Health.