Guaranteeing policy renewal

Key features

Policy term. The policy has a term of three years before it has to be renewed. Most Mediclaim policies from general insurers,on the other hand,have a policy term of only one year,though a few policies with two-year term are also available.

Renewability. The unique selling proposition USP of this plan is that renewability of the plan is guaranteed till the age of 75. Most Mediclaim policies from general insurance companies barring a few exceptions dont guarantee renewal of the plan. One point that needs to be added here is that the Insurance and Regulatory Development Authority IRDA recently issued a circular stating that general insurers must renew mediclaim policies except in cases of fraud and misrepresentation. General insurers will henceforth have to mend their ways. So it remains to be seen whether MediAssures USP remains so in the times to come.

Premium guaranteed. The premium is guaranteed,i.e.,it does not change,for the term of the policy,which in this case is three years. In case of most Mediclaim policies,the policy term is only one year and the premium does change at the time of renewal.

Premium payment mode. In case of most Mediclaim policies,you have to pay the premium in advance and at one go. MediAssure,on the other hand,allows you to make monthly payments. This would be a boon to the salaried class and to cash-strapped individuals.

Nature of renewability. The nature of the policy to be offered at renewal is not stated and will be the policy in force at that time. The companys website indicates that it will soon come out with a product that is likely to have a compulsory co-pay feature.

Co-payment. Co-payment means that the insured pays a portion of the eligible claim amount. If the co-pay is 20 per cent and the eligible claim amount is Rs 1 lakh,the consumer bears Rs 20,000 while the insurance company reimburses the balance 80 per cent. The purpose of co-pay is to ensure that the insured also keeps a check on total expenses,and there are no unnecessary or inflated charges by the hospital just because the patient has health insurance.

In case of MediAssure,the co-pay requirement is 20 per cent in higher category hospitals if you choose anything higher than twin sharing a/c room or if you choose to get treatment in a non-network hospital. The co-pay requirement also changes based on which type of policy you choose standard or premium.

Only a few Mediclaim policies have co-pay requirements.

Pre-existing diseases. In case of MediAssure,this is defined as any disease that existed at any time prior to the policy and can be covered after two years of continuous coverage. Cover for complications arising from diabetes and/or hyper-tension,which if agreed to be covered,will be available from the third policy year,probably after the payment of additional premium.

In case of Mediclaim policies,some companies have started defining pre-existing disease as only those that arose or were treated in the four years prior to the policy being taken for the first time. Coverage of pre-existing diseases including complications arising from diabetes/hypertension varies widely.

Medical test requirement. Though not very clear,this is likely to be required,especially in case of individuals who have adverse medical history. The policy varies from one company to another. Again,in case of Mediclaim,the policy varies from company to company.

Other features. In case of MediAssure,the doctors fee cannot exceed 20 per cent of total eligible hospitalisation expenses. Moreover,the maximum benefit from ICICI Pru-Life for all reimbursement types of policies MediAssure and Health Saver cannot exceed Rs 25 lakh.

Bottomline

All in all,this is a good product. Two of its features guaranteed renewability though it would have been better if there was an assurance that the same policy,with the same wordings,would be available for renewal,even if at a higher rate and its monthly premium payment option are customer-friendly.

The co-pay feature ensures that the patients family also monitors the bill amount and ensures that it remains reasonable. Co-pay is controversial in the US market. But given the manner in which the Indian healthcare industry is structured,no other alternative for keeping claims on such policies at reasonable levels appears feasible. This will ultimately benefit all consumers by way of lower premiums.

The only concern is the ability of a life insurance company to manage the claim process in a policy where the number of claims tends to be large by contrast,life insurance policies have lower number of claims. However,ICICI Pru-Life would already have some experience in dealing with a large number of claims on its hospital cash,critical illness,major surgery and treatment policies and hence should be able to deal with this as well. u

Key features

amp;149; The policy covers you for Rs 2 lakh to Rs 10 lakh

amp;149; The plan guarantees that the insurer will not turn down your request to renew the policy

amp;149; Most general insurers reserve the right to turn down your request for renewing the plan

amp;149; The plan allows you to pay monthly premium,instead of one lump-sum premium in a year

The author is CEO,ApnaInsurance