Naik Seeks Pension Plan Age Limit Breather

Minister for Petroleum and Natural Gas Ram Naik today said he will ask the finance minister to relax the provisions of the Varishta Pension Bima Yojana and the Universal Health Insurance Scheme.

General insurance officials however, pointed out any relaxation in the age bar would impact the cost of the product as there was no government subsidy on the payment of claims.

The minister pointed out that the one person per family under the Pension Yojana was restrictive. He felt that if a couple in a family are eligible to avail of the scheme then they should be allowed to avail of its benefits.

 

Similarly, the upper ceiling of 65 years for availing of the health insurance was not justified under the universal health plan. This comes on the back of removing the maximum age bar on the pension scheme from the earlier 79 years.

"The cost of the health product at Rs 1 per day has priced in a loss ratio of 80 per cent and an administration cost of 20 per cent. Any change in the age restrictions will necessarily need a revision in the pricing of the product," said a senior insurance official.

Based on experience of the insurance companies in the area of healthcare since 1987, the age should be limited to 65 years in first round, else it will result in insurance companies having to pay the differential from their own balance sheet.

Unlike the special pension scheme, the universal health plan is not subsidised by the centre except to extent of subsidising the premium payment of those below the poverty line (BPL).

Gipsa secretary S K Mahapatra told Business Standard that as the companies will work on thin margins, the challenge is on cost and loss control.

"We are thus in active dialogue with state governments and the Ministry of Health to network with public and private hospitals to come out with special, cost-effective hospitalisation packages," he added.

The government has set a target of 70 lakh policies to be sold under the universal health plan in order to extend medical insurance coverage across the rural and semi-urban regions.

Meanwhile, Naik observed that in the context of the declining interest rates, the pension scheme was a boon to the senior citizen.

Referring to the Life Insurance Corporation of India (LIC), he said, albeit in a lighter vein, "sometimes it is good to have monopolies. The Corporation is a government undertaking and will have it's backing to the hilt."