General Insurance: Rakesh Jain

When a medical claim arises, is a reimbursement product better or the one which pays a lump sum amount to the insured? Also, what are the advantages of buying health plans from a life insurer?
Both a reimbursement product and the ones paying a lump sum (benefit) amount have their own advantages and disadvantages. While a reimbursement policy is intended to indemnify the actual hospitalisation expenses incurred subject to sum assured, a benefit policy is a named ailment or surgery policy which will only pay a flat amount, irrespective of actual expenses incurred.

The key difference is that policies paying a lump sum have no correlation with the end usage of payment. Generally, insurance covers a restrictive list of ailments or surgeries, while a reimbursement policy is more exhaustive in coverage but indemnifies only the actual expenses. These two products complement each other.

In the Indian market, 95 per cent of the policies sold are indemnity-based. Life insurers generally offer benefit-based products that are more long-term in nature and also have a savings element. All this is priced in accordance with the benefit provided. It is on an individual customer to make a choice between the type of policies.

My daughter (aged 14) has developed asthma. Do I need to buy her a health insurance policy now? Will her risk get covered or is there a waiting period for asthma? Currently, we have a family floater plan (sum assured of Rs 5 lakh).
In case your daughter is already covered under the family floater and asthma was diagnosed during the policy period, then it will be covered, subject to policy terms and conditions.

However, if she is not covered under the family floater plan, then you will have to send a request to your insurer for inclusion of her name, along with the declaration of medical status. It would be at the discretion of the insurer whether to cover her under the policy or not. If she is accepted, this will be termed as a pre-existing disease (PED) and covered on certain conditions.

Different products have different waiting periods for PED, subject to a maximum of four years, after which it would be covered, provided she has maintained a continuous coverage. It is advisable to take health insurance coverage as soon as possible because of the uncertainty around illness and the increasing cost of treatments.

The views expressed are the expert's own. Send your queries to yourmoney@bsmail.in
Today, the chief executive officer of Reliance General Insurance, Rakesh Jain, answers your questions