If you had been considering the premium amount on health insurance policies to be too stiff, this will come as good news to you. Especially, at a time when most of the general insurance companies have raised their health insurance premiums by 20-30 per cent, the news of a public sector general insurance company, looking at launching one of the cheapest health insurance policies - with the premium being less than Rs.1000 for a yearly Rs 1 lakh sum assured – may come as a relief!
New India has always been one of the general insurance companies with a flair for innovation. Their differential pricing for health insurance between Metros and non-Metros is an example. And now, by looking towards launching one of the cheapest health insurance policies, they are on their innovation mode again.
But, while, the initiative comes with the prime motive of expanding the reach of their health insurance umbrella, the picture may not be as rosy for the prospective customer as it appears to be. Though the news seems profitable from the view of a customer, the reduction in the premium rates comes with a corresponding reduction in some of the related benefits that are otherwise, normally available under other health insurance policies.
An in-depth analysis of the initiative will enable you, as a customer, to understand the specifics behind the product (cheapest health insurance policy) and will also help you in making an informed decision.
First, Limited choice of hospitals:
The reduction in the price of the policy is accompanied by a corresponding limit in the choice of hospitals.
New India has identified a panel of hospitals with whom it has probably negotiated discounted rates for different procedures of treatment for its policy holders. For you, as a customer, this means that in order to avail of the claims benefit, you would have to get treatment done from the hospitals that have been identified by New India. This limits your choice of hospital from where to get treatment and if you do choose a hospital not identified by New India, then the entire reimbursement benefit will not be given to you, thereby making a dent in your pocket.
Second, Coverage of major illnesses only:
The low price policy comes with the condition that only major illnesses will be covered.
Through its ‘Cheapest policy’ initiative, New India plans to provide coverage only for certain major illnesses as the incidence of claims towards these illnesses is much lower than overall incidence of claims in the Health portfolio. For you, as a customer, this means that you can claim reimbursement for expenses accrued only in case those expenses cater to a major illness that you have suffered from, else, no other expense gets reimbursed.
So, what is in it for you?
Mr. K.S. Sankar, from Medimanage.com, an expert in health Insurance for almost 30 years, puts it lucidly:
“This product of New India is not, repeat not, a substitute for your standard health insurance. As stated, this product covers only specified illnesses while the standard product covers all hospitalizations following any illness (both of course subject to the standard exclusions). Therefore, if you were to substitute your existing health insurance with this product, you would be left to fend for yourself for hospitalizations following illnesses other than those covered under this product”.
Does it mean you cannot take advantage of New India’s cheapest policy?
Indeed you can; all you need to do is to transfer the top layer of your existing insurance to this product.
Mr. K.S. Sankar explains, very vividly, how you can have the cake and eat it too...
“Whatever is the Sum Insured under your current health insurance policy, at the time of its renewal, ascertain the renewal premium for the same sum insured as well as for a sum insured that is less by Rs. 1 Lakh. If the differential is more than the price you would pay for this New India product for a Rs. 1 Lac Sum Insured, renew your existing policy for a Sum Insured that is less by Rs. 1 Lac in comparison to the current Sum Insured. In parallel, you get yourself this policy of New India for Rs. 1 Lac. This way, you pay less for both the polices together than you would if you renew your existing policy as it is. You use the New India Policy for any hospitalization following illnesses covered by the New India policy. You use your existing policy for all other illnesses.”
The amount of Rs.1 Lac mentioned above as Sum Insured under New India policy is only suggestive. You need to determine how much you will knock off from your existing policy Sum Insured and transfer to this New India policy. We would be happy to provide comparative arithmetic for you if you could approach us a month prior to renewal of your existing policy.
If your current health insurance is only for Rs.1 Lac:
“If so, independent of this new product, it is time you ought to be looking at increasing your Sum Insured. May be this product could be the trigger. You could take this in addition to your existing policy and if you do not already have a health insurance policy, we suggest you buy a standard policy in addition to you New India’s cheapest policy.
Yes, while doing the price comparison, you need to consider the fact that the New India policy will pay for Hospitalizations only in the hospitals listed in the policy, and then decide whether the differential in price is worth the while for you.”
It is a good thing innovations are happening in the insurance market place. Like in any other market place, not all new products will make sense to every customer. Same holds good with this product also. With professional guidance you need to decide how best you could get the advantage of any innovation, including this one.