Insurers to offer life covers with built-in mediclaim

Policyholders will no longer need to look out for two separate insurance companies to buy life coverage and a health insurance policy.

Life insurers are busy working out modalities of offering hospitalisation cover on similar lines as that of a Mediclaim policy, which offers reimbursement of hospital expenses.

This is as opposed to the current practice adopted under the critical illness rider.

Here, the policyholder is eligible to a specified sum on being diagnosed of any specified critical illnesses. This coverage extends to at least four critical illnesses and in the case of Birla Sun Life Insurance Company up to 17 illnesses.

Insurance Regulatory and Development Authority (IRDA) issued a circular about three months back to life insurance companies allowing them to offer hospitalisation cover.

With not many non-life companies willing to offer health insurance, the regulator hopes that by expanding the number of players in the sector, it will help develop the healthcare sector.

The Life Insurance Corporation of India proposes to offer the product shortly. Its counterparts in the private sector are equally keen to offer the product.

"We propose to offer the product selectively in certain towns since the Indian medical system is not honest," said the CEO of a leading private insurance company.

The experience of non-life sector in offering healthcare products has not been very encouraging. This explains why not every life insurer wishes to offer healthcare products.

"We are not well-equipped to handle claims in this sector, as it will involve the need for tying up with hospitals and trying to check wrong claims," said a senior executive with a Mumbai-headquartered life insurer. Mediclaim policies have a poor claim ratio often exceeding 100 per cent.