Life Insurance: Deepak Sood

How do medical policies by life insurers and non-life insurers differ?
Not all life insurers offer health insurance plans. Health plans by life insurance companies are long-tenure products — five years or more. General insurers’ health policies are renewable annually. Policies offered by life insurers have premiums fixed for three-five years, whereas non-life insurers may change premiums every year.

Health plans from non-life companies are indemnity plans, that is, actual expenses incurred by the insured are reimbursed with or without a deduction, though there is an overall limit on a disease, with sub-limits on the hospital room rent, ambulance, medicines and operation.

Life insurers offer health policies with a defined amount of payment, irrespective of expenses incurred by the insured. There may be separate amounts fixed for medicines, room charges and operation. This may be more, or even less, than the expenses incurred. Some life insurers also offer indemnity covers. Depending on the health condition, policies offered by different insurers may also differ.

With new unit-linked insurance plans (Ulips), is buying a unit-linked child plan for my three-year-old daughter a good option?
Buying an insurance policy to make provision for your child’s future expenses, such as education and marriage, is good, as Ulips are one of the most efficient way to provide for medium- to long-term goals.

With a unit-linked child plan, you can decide on the premium you will want to pay at regular intervals. This is invested in various fund options based on your choice (post charges). The new Ulips have more rationalised charges, as compared to the older ones, and hence, these are more beneficial for policyholders.

The most important feature of a unit-linked child plan is the cover on the life of the proposer parent, as well as a waiver on future premiums, if something happens to the parent. The policy provides maturity proceeds to the beneficiary, that is, the child.

How important is a rider attached to a life insurance policy? How does it work? I was advised to take up a critical illness rider. Is it different from a health insurance policy?
A rider adds value and flexibility to the base policy, providing additional protection on benefits from the base policy. The rider benefit is added by paying an additional premium, which may make the overall package attractive, as compared to separate policies taken for different covers. Sometimes covers offered under riders may not be available on a standalone basis.

With critical illnesses riders, if the insured is suffering from any of the defined critical illnesses, the insurance company pays the lump sum defined in the policy schedule. This cover is meant to compensate the insured for loss of income, it does not cover the cost of treatment. The payment is made on diagnosis of the specified illnesses, irrespective of the expenses incurred. The illness should meet the definition of critical illness given in the policy.

A health insurance policy settles claims depending on expenses incurred, generally subject to limits and sub-limits. It is advisable to take critical illness cover in addition to a health insurance policy, as both are different and cater to different needs.

The writer is the MD & CEO, Future Generali India Life Insurance. Send your queries to yourmoney@bsmail.in