New Wine In Old Bottle

Yogesh Patel, a senior level site engineer returned home after a lengthy on-site stint and within 48 hours was hospitalised awaiting a by-pass. Surprisingly, he had seemed healthy enough for his 50 years. Ashima Jain, an easygoing mid-30s housewife collapsed one day and had to be operated for appendicitis.

Common incidents, but they still they catch even the healthiest of us unawares. And between rushing to hospitals, getting the best doctors, arranging for rooms and various tests, you get stumped by the figures staring at you from the hospital bills.

The severe cash-crunch following this nightmarish experience can be somewhat relieved with a policy like Mediclaim. However, this was not always the case. Introduced in 1986 by the General Insurance Corporation of India, the policy with lopsided features had no mass appeal for quite some time.

 

S K Dandona, assistant VP, Desein Consultants, remarks,I had some years ago opted for this policy but looking at the various restrictions and limited benefits I became dissatisfied and have now discontinued it.

However, some sign of change is now visible. According to Pawan Puri,insurance consultant, The present revised policy while taking care of the flaws in the old policy has increased benefits and is now truly worth applying for. Although aimed at everybody, from an individual to a family and even groups, the insurance companies understandably look forward to conducting business with groups. Apart from more business, a group insurance helps the companies to even out the risks involved, explains Puri.

The basic concept of covering costs during hospitalisation (accident/disease) including domiciliary or home hospitalisation (DH) remains unchanged. Hence, the 30-day exclusion and the whole year exclusion for

certain diseases listed in the old policy still hold good. So does

the list of diseases not covered

at all.

Similarly, DH still does not include out-patient treatment or private consultations and can be claimed provided the home stay exceeds three days only if the patient is in too delicate a condition to be shifted or a hospital bed is not available. So what has changed then?

Age Limit: Well, previously, insurance was available from the age of 5 to a maximum of 70 years. Beyond this, the benefits got reduced by 10 per cent upto 75 years and 20 per cent beyond the age of 75 years. Under the revised policy, full benefit can now be availed upto the ripe old age of 75 years. However, children between 3 months and 5 years of age can be covered if at least one parent is covered concurrently.

Sum insured and premium schedule: Under the old policy, one could avail of a maximum benefit of Rs 83,000 and a minimum of Rs 10,500. Depending on the amount of benefits one wished to opt for, there were six categorisations. The payment of these benefits were curtailed by three sub-limits, namely, boarding and nursing charges, professional and service charges (including pre- and post- hospitalisation) and facilities like operation theatre, medicines, X-rays, dialysis, chemo/radiotherapy, pacemakers, artificial limbs, cost of organs and so on. These limitations did not leave much room for relief.

For instance, a by-pass surgery requiring 30 days of hospitalisation (inclusive of ICU) would cost on an average Rs 20,000 for boarding and nursing, Rs 40,000 for professional and surgical fees and another Rs 60,000 for conduction of tests, medicines, that is, a gross expense of Rs 1.2 lakh. Previously, the maximum benefit under Category I was fixed at flat sub-limit rates of Rs 30,000, Rs 22,000 and Rs 28,000 respectively. The policy would effectively cover only 69.1 per cent of the cost incurred!

Under the revised policy, these categorisations have been removed and so have these sub-limits. Now, the sum insured ranges from Rs 15,000 to Rs 3 lakh and this is all inclusive. The limit of liability for DH is, however, just 20 per cent of the sum insured (SI). So, if you get a cover for Rs 1 lakh then under DH you get a maximum benefit of Rs 20,000.

Moreover, the premium scheduled is fixed according to your age now. This makes the policy extremely lucrative especially for younger policy-holders. For instance, under the old scheme one paid a premium of Rs 1,300 for the benefit of Rs 83,000 while under the new policy you have to pay Rs 1,480 (45-55 years of age) and just Rs 1,075 (upto 45 years) for the overall benefit of Rs 1 lakh.

A comparison of the premium cost indicates that the old premium came at 1.5 percent of the benefit(Rs 83,000) irrespective of age while under the new policy, Sanjay, age 30, will pay the premium at 1.075 percent while A Sharma, 52, will pay it at the rate of 1.48 percent of the benefits(Rs 1 lakh).

And beyond a lakh? Well, a person below 45 years going for a sum insured of Rs 1.5 lakh will pay Rs 1,075(premium for one lakh SI) plus Rs 500 (one percent of Rs 50,000), that is, Rs 1,575 only.(See Table).

Tax Benefits: Added to the obvious benefits is the 100 per cent tax exemption for the premium paid for this cover under section 80D.

Probably, now the only glaring disadvantage is the delayed process of reimbursing the claim. While the insurance company demands a preliminary notice within seven days of hospitalisation and final claim alongwith the bills by 30 days following discharge, the claim payment can take a minimum of one month following this.

Notwithstanding the fact that monopolisation of insurance by four companies makes for a heavier load, these players will eventually have to aim towards a service that is more customer-friendly.