Single-disease plans good for insurance sceptics, but not fit for long term

Combination of comprehensive health insurance and critical illness cover a must to meet healthcare needs

Many individuals don't buy health insurance for various reasons. Some don't feel the need, given they are healthy. Then, there are those who think that insurance is complex and an insurer will not make adequate payment when a claim arises. To cater to such individuals, insurance firms have started launching disease-specific covers. 

Recently, Bajaj Allianz General Insurance launched M-Care, a health insurance plan that covers seven common vector-borne diseases prevalent in the country, including dengue, malaria, chikungunya, kala-azar (visceral leishmaniasis), Japanese encephalitis, filariasis and the Zika virus. An individual can choose a cover ranging from Rs 10,000-100,000. The minimum premium is Rs 160 and the maximum is Rs 4,000 (for a family floater, covering up to six members).

M-Care is a fixed-benefit product and not an indemnity one. It means, if an insured suffers from any of the specified diseases, the company will pay the entire sum assured. In indemnity plans, the insurer pays only the expenditure that the customer has incurred.

"We kept it as a benefit product as it is simple to understand. The customers know how much they will get if they fall ill. The product is meant for those who think they don't need insurance as they are healthy, and are concerned about a few common diseases," says Bhaskar Nerukar, head (health administration team), Bajaj Allianz General Insurance.

Before Bajaj Allianz, DHFL Pramerica had launched Dengue Shield, also a fixed-benefit product. One of the advantages of the fixed-benefit plan is that the premiums are fixed depending on the sum assured, and the age of entry is usually restricted to 65.

Apollo Munich Health Insurance also has Dengue Care, which is an indemnity plan, but has outpatient benefits up to Rs 10,000 given for doctor consultation, pharmacy, diagnostics test and home nursing.

One positive of disease-specific policies is that they are less expensive than regular health insurance ones, or even a critical illness policy. Since they cost less, a customer can avail of a higher cover. They are also easier to buy. Sometimes, there are no medical tests. They are sold on the basis of a declaration made by the insured, and in some cases, can be purchased online.

It's not just seasonal diseases that insurers are targeting. Some have also launched a cover for cancer. The rationale is the same: even when healthy, individuals dread only specific diseases. Such policies are likely to cover the disease more comprehensively.

SBI Life's Sampoorn Cancer Suraksha, for instance, pays part of the sum assured upon diagnosis at the minor stage. It also makes a payout at the major stage and at the advanced stage (depending on the payment structure chosen). The drawback of the disease-specific cover is that they only cover you for a single illness. They don't offer comprehensive coverage as traditional policies do. "The key intention of the insurer to launch a disease-specific plan is to keep the costs down for consumers so that it's easier to adopt. They are relevant for people who have a fear of certain illnesses," says Vaidyanathan Ramani, head (product and innovation) at Policybazaar.com.

Ramani suggests that one should look at disease-specific plans as a short-term measure. If an individual is unable to buy a comprehensive cover this year, he may go for such covers. But they are not an alternative to comprehensive plans. Further, opt for a standalone critical illness plan to complement the comprehensive cover. Avoid going for add-ons or a policy that covers only cancer.