Why first-time health insurance buyers should go for Arogya Sanjeevani

As affordability grows, port to a higher-end health cover or buy a top-up plan

With medical inflation ranging between 12 and 14 per cent annually, buying health insurance should be high on buyers’ priority list. Yet surveys show that 75-80 per cent of hospitalisation expenses are borne by customers out of their own pockets. One factor that deters many from purchasing health insurance is lack of faith. Buyers are not sure whether their insurer will reimburse a claim when it arises. It is this mistrust that the Insurance Regulatory and Development Authority of India (IRDAI) has tried to address with Arogya Sanjeevani, a standard health insurance product that all health and general insurers must offer from April 1.

Sometimes, customers do not understand the terms and conditions of their cover. When their claim is rejected, even on legitimate grounds, they feel aggrieved. “The standard product will have the same features irrespective of which insurer you buy it from. Policy wordings will be the same. The features have been decided by the regulator. Hence, it will reduce expectation mismatch and distrust,” says Amit Chhabra, business head, health insurance, Policybazaar.com.

Currently, insurers offer products with varying levels of coverage and prices. Doing a feature-versus-price evaluation for so many products and then deciding which one to buy is a daunting task. This makes selection difficult. “Arogya Sanjeevani will make decision much easier for buyers,” says Subramanyam Brahmajosyula, head -underwriting and reinsurance, SBI General Insurance. 

Today, customers can port to another insurer without loss of accumulated benefits. However, both the sum insured and the coverage offered by the second insurer can be different from that of the existing one. “Even when porting, customers need to take a number of factors into account. Most do not have the time or the inclination to go through the fine print. Now, with a standard policy, they can be assured that they will get the same coverage,” says Brahmajosyula. 

This product, however, comes with several restrictions (to ensure affordability). The maximum sum insured allowed is Rs 5 lakh. There are caps on room rent (2 per cent of sum insured or Rs 5,000 per day), intensive care unit and cardiac care unit charges (5 per cent of sum insured or Rs 10,000 per day), ambulance charges (Rs 2,000 per hospitalisation), and cataract treatment (25 per cent of sum insured or Rs 40,000). There is also a co-payment requirement of 5 per cent (this percentage of claim will have to be borne by the customer).  

Arogya Sanjeevani is a base-level product. First-time buyers who have just started working or those whose salaries do not allow them to buy a more expensive cover should go for it. It may also fulfil the needs of individuals and families living in tier III and IV towns, where medical costs are lower. As income and family size grow, customers can shift to a higher-end plan, or buy a top-up plan to bump up coverage. 

Those who live in metros and want to be treated at high-end hospitals will find the Rs 5 lakh sum insured inadequate. Those who want a higher sum insured, or desire features like wellness, restore, etc. may opt for the higher-end plans of insurers.

Once insurers have announced their prices, compare them, evaluate the claim servicing capability (a claim settlement ratio of above 90 per cent is a good yardstick to go by), and the list of network hospitals (the best hospitals in your vicinity should be included), and then decide which insurer’s standard cover to go for.