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Irda widens health insurance net

Neha Pandey Deoras  |  Mumbai 

In the draft guidelines on health announced by Regulatory and Development Authority of India (Irda) in May, the definition of health was widened. According to the draft norms, travel, and would fall under the health segment.

“Health business means the effecting of contracts which provide for sickness benefits or medical, surgical or hospital expense benefits, travel health and cover,” said the guidelines issued by Presently, and come under miscellaneous business.

This may require the ministry to alter the definition of health under the Health Act, as it does not include travel, and critical illness under health “The hitch: Major health norms like portability and lifetime guaranteed renewability may be applicable to these covers also, which may be very difficult for travel as it is a short-term cover with a maximum policy term of six months,” says a health head of a general company.

While and insure health-related expenditures, an international travel cover is largely health as it is a mix of medical and travel-related covers. For example, consider a $5 lakh cover with Tata AIG’s that insures you for accident and sickness medical expense reimbursement. This comprises accidental death and dismemberment (common carrier) for $5,000, accidental death and dismemberment for $25,000 (24 hours), sickness dental relief ($500) along with emergency medical evaluation. Here travel or baggage related covers (baggage, passport, trip delay) are covered for maximum $1,000.

Also, the regulator wants “travel medical policies may be offered either as a stand-alone product or as an add-on cover to existing health policy as and when an existing policyholder travels.” Presently, travel covers are only stand-alone covers. and critical illness indemnity covers are also available only as stand-alone covers, while benefit covers (issued by life insurers) can be bought as an add-on on term plans.

At the same time, the regulator has disallowed assigning policies to anyone else. “No assignment of health policies shall be allowed irrespective of whether they are indemnity or benefit based,” said the draft guidelines. This means you may not be able link any of the general policies to loan.

Many general insurers allow linking or critical illness cover under the credit shield business, that is link it to home loan. Here, in case of you lose your income (due to accident and disability or any terminal disease) the policy proceed takes care of the loan repayment.

“The regulator is discouraging the credit shield business as these covers are short-term ones and may lead to huge payouts for companies,” said another health head.

First Published: Wed, July 25 2012. 00:39 IST