Combi plans for those with no cover

Life-cum-health plans don't allow customisation. Separate term, health plans can provide higher coverage

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Most financial planners will recommend both life and health plans for everyone. But, how does one look at a combined product? With Star Health and Allied Insurance along with IndiaFirst Life Insurance launching Star First Combi Plans – a combination of health and life insurance plan, it is an interesting question if both can be combined.

This product offers life cover for the policyholder along with health cover for self and family. The sum assured is between Rs 1 lakh and Rs 15 lakh for health insurance and Rs 3-9 lakh for life cover. The premiums are eligible for tax benefit under Section 80 (D) for health insurance and 80 (C) for life insurance.

The entry age for health insurance is till the age of 65 years, while for life insurance it is between 18 and 50 years. Health cover is renewable till lifetime with rising premium due to rise in age. The life cover is renewable after every five years and is available till 60 years. The premium may change after five years, if a new policy is issued. You can port out of the health policy, but it is not possible in case of life policy, says S Prakash, executive director, Star Health and Allied Insurance.

“Policy holders can choose different sum assured for health and life policies. The idea is to get a holistic cover. For someone who already has a term life plan, this can be an added benefit,” says Prakash. The product is cost-neutral, says Naval Goel, founder of Poliycx.com.

A standalone health plan from Star Health and Allied and a separate term plan from IndiaFirst would cost the same as the combi product. “There is no cost benefit nor is it more expensive,” he says.

In the combi plan, health insurance for two adults - having a sum assured of Rs 5 lakh and age up to 35 years - is available at a premium of about Rs 8,500. The premium for the term plan is Rs 2,100.  For a family floater - two adults plus two children - the health insurance premium is Rs 12,300. The term plan component costs the same because only the policyholder’s life is insured.

Generally, health insurance for two adults with the above-mentioned criteria would cost Rs 6,000-12,000. While term plans of this small ticket size are usually not available.

“The minimum sum assured for term plans is Rs 10 lakh and most companies today offer sum assured of Rs 25 lakh and above. This combi product has no particular benefit since the sum assured for the term plan is very less. In case of health insurance, the coverage of Rs 15 lakh is fine,’’ Goel says.

Bundled products such as combi products would typically be sold to bank customers as an over-the-counter product, says Mahavir Chopra, director (health and life insurance), Coverfox.

“Both health and life insurance are critical. It is better to compare term plans as you can get cheaper ones. And, if you buy a standalone health cover, you can customise it. A combi product is good only if you have no time, as it is better to have some cover than no cover at all,” he adds.