Compared: Defined Benefit Health Insurance V/s Traditional Health Insurance

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Comparison of Health Insurance

Jeevan Arogya V/s Aegon Religare V/s Tata AIG Wellsurance V/s Mediclaim

The Health Insurance scene in India is changing at rapid speed. With ULIP premium booking sagging, and the Health Insurance sector booming, every Insurance company, particularly Life Insurance Companies are working hard towards creating a prominent presence and claiming their share in the growing Retail/Individual Health Insurance pie.

Life Insurance Companies traditionally being experts at creating Defined Benefit fixed tenure products, launching Defined Benefit Plans in Health Insurance is the obvious first choice for them.

The recent launch and subsequent promotion of LIC’s Jeevan Arogya, a Health Insurance plan, the product being from LIC, received good amount of interest. In addition to LIC’s Jeevan Arogya, Aegon Religare Life’s Health Insurance Plan (due to its massive Print advertisements some months back) and Tata AIG General’s Health Cash products (primarily due to its sustained Tele-marketing effort for quite some years now) have found the most buzz amongst all the Defined Benefit products.

Of course, though such promotions result in more interest about Health Insurance among the common man, it has also created a huge lot of confusion for every Health Insurance seeker. Most customers are confused whether they should buy the regular traditional health insurance product from General Insurance companies like New India or an ICICI or an Apollo, or buy this seemingly simple product from Aegon or LIC?

With a laundry list of terms and conditions, Health Insurance has always been a tricky product for the customer. The Defined Benefit products have added to the complexity by creating further conditions like day benefits, annual limits and lifetime limits on benefits, defining the list of treatments covered under the policy and many more.

To compare these products, let’s first understand what both these products stand for?

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Traditional Mediclaim:

Such Health Insurance plans are called "Indemnity based plans", and pay the actual expenses on submission of original papers, of course subject to terms and conditions of the policy.

Defined Benefit Products:

Also called Hospital Cash plans, pay defined benefits on no. of days the insured customer is hospitalized. The newer products from LIC and Aegon are more advanced and cover all surgical benefits with a fixed compensation, irrespective of whether your actual costs are low or high. Such products pay claims on photocopy of bills also.

Let’s take a live case and compare the benefits vis-à-vis a premium. Let’s take an individual, Sanjay who is 32 years old and wants to buy Health Insurance. Here is how the medical insurance products would compare with the premium.

Comparison of Defined Benefit Products with Traditional Mediclaim

Comparison of a Claim made between Defined Benefit Health Insurance Products and Mediclaim

Let’s look at some live instances, so as to understand, how claims would be differentially paid.

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Case # 1 : Large Claim for Angioplasty:
For instance, say, Sanjay has chest pain, for which he consults a cardiologist, who suggests an angiography be conducted, which costs Rs. 20000/-. Observing the reports, the Doctor recommends an Angioplasty with 2 stent implantations. Angioplasty at a good Hospital will cost around Rs. 1.75 Lakhs for a 3 Day hospitalization, the amount that is estimated to be paid in each case for a 3 day hospitalization.

It is clear in this case, that Jeevan Arogya has the highest out-of-pocket expenses, and burns a big hole in your pocket. Moreover, as rightly pointed out by Mr. Girish Jain in the comments section, Jeevan Arogya requires a minimum of 2 stent implantations, failing which the Surgical Benefit would not be payable. Such fine print would in all probability be missed by even experts, and the customer could be left unguarded.

Case # 2 : Smaller Claim for Hernia:
Let’s take another case of a smaller surgery, like Hernia. Manpreet has been diagnosed for Hernia. He has spent Rs. 3000 on Consultations, Diagnostic Tests, including an MRI. Manpreet is hospitalized for 2 days and undergoes an Hernia repair surgery. The cost of hospitalization including the surgery is Rs. 55000/-

Final Take:

Best Defined Benefit Mediclaim:

From the comparison of leading Defined Benefit plans above, it is clear that Aegon Religare is way ahead in terms of benefits, while the pricing is pretty much similar. However, we must also point out here, that The Tata AIG Wellsurance product being hybrid (which also includes a Critical Illness cover), hence the pricing is strictly not comparable. Depending on needs, In case you are looking at buying a Critical Illness cover also, Tata AIG could be another good choice. Please speak to a health insurance advisor, before taking a decision.

Is Defined Benefit Product better than a Traditional Mediclaim?

Though Defined Benefit Mediclaim guarantee exact claim payments, as we have seen above, such amounts could be drastically lower than your actual expenses. The trickier part is most of us being from a non-medical background would never be able to understand the chart of surgeries and gather whether the amounts would pay for a good proportion of the expense and help save you from burning the hole in your savings, the precise reason why you are looking at purchasing a Health Insurance Policy.

Defined Benefit Products are therefore suitable, if you are looking for a supplementary cover for the non-medical expenses that are not covered by the traditional mediclaim like loss of earnings or conveyance expenses etc. Such products should not be relied as a primary insurance coverage against healthcare expenditure in the long term for your family. The product is also not suitable to insure people who have a pre-existing ailment.

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