Liquid fund linked to medical benefits works for senior citizens

ICICI MF's new product allows investors in the fund house's liquid fund to pay for health care expenses

Companies in the financial sector are increasingly coming up with innovative health care products. Last year, HDFC Bank had launched a prepaid medical card partnering Apollo Hospitals that employers can issue to their employees. Recently, Arogya Finance, a non-banking financial company, launched a pre-approved medical loan card. And now, ICICI Prudential Mutual Fund has collaborated with Vidal Healthcare Services to introduce a medical advantage feature that allows investors to pay for healthcare expenses through their investment in its ultra-short term scheme.

The idea is simple. Many individuals keep contingency cash in a liquid fund. This is because liquid funds have the potential to give better returns than bank fixed deposits (FDs) and are also more tax-efficient. ICICI Prudential has tied up with the healthcare service provider to enable investors in its ICICI Prudential Savings Fund use the money seamlessly for medical purpose.

Say, a person is hospitalised. He will need to use the Vidal Healthcare card on admission and sign a redemption form. The third-party administrator will take an estimate from the hospital and accordingly redeem the units for payment. The fund house also blocks additional units, according to the hospital’s estimate, to take care of any other medical-related expenses. For the fund investor, it will be cashless. One drawback is that the facility can be used only at hospitals that are empanelled with Vidal Healthcare, a total of around 6,000 in 800 cities and 1,500 diagnostic centres.

To make the deal sweeter, a person can avail 24X7 access to a doctor on phone, up to 25 per cent discounts on medical tests and hospitalisation, access to a neutral second opinion and advice on which hospital to choose.

The feature is only available those investors in the fund and cannot be availed for other family members. Say, you and your wife are joint investors in the ICICI Prudential Savings Fund. In case of your child or parents getting admitted, this facility cannot be availed. In case of need for emergency funds, the investor will need to redeem funds following the normal redemption route.

According to financial planners, the feature can be useful for many. This product suits seniors who don’t have medical insurance. Financial planners usually suggest them to keep some cash in bank or liquid fund for medical emergencies. The presence of a service provide in this case can make the process smoother.

“It also suits individuals that have pre-existing disease that insurance companies would not be willing to cover. Also, health insurance plans do not cover diagnostics, which this does and also offer discounts,” says Malhar Majumder, a certified financial planner. He also feels the free second opinion facility offered is useful if the service provider is able to implement it well. Those who have co-pay in their insurance plan can also look at it.

The money that you need to keep in the liquid fund would vary depending on the profile of the person. For those currently working and have a medical insurance can keep up to Rs 2 lakh, according to Brijesh Dalmia, a certified financial planner. Senior citizens or those with pre-existing disease can contribute fixed monthly sum to it, as they might regularly need medical care. However, financial advisors say this product is not a replacement for a health insurance, which should be the first priority of individual that will help them to cover medical risks at a nominal cost.

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