Health Insurance from Banks. Extraordinary, unbelievably, excellently low premium. No Medical Tests. Same Premium for all ages. Better Features than Retail Products. Sounds too good to be true! Right? Should you buy one? No. Why? Read on.
What is a Bank Mediclaim?:
Mediclaim in India provided by Banks like Bank of India, Syndicate Bank, Punjab National Bank etc. are Group Health Insurance products, where account holders are members and are provided Certificates of Insurance. Such products cover the account holder's family including some which cover parents too.
Why they look more attractive?
The premium of bank medical insurance products are extremely low. With better benefits, these appear to be much more attractive than the open market retail health policies. This is purely on account of the large volume of premium the bank provides to the Health Insurance Companies, which help them negotiate a tailor made group product with differential premium, benefits and terms for their members.
What is the flipside of such Group Products from Banks?
So, why are we recommending against it? Here go the reasons, why you should not buy a "special" mediclaim provided by your bank.
- In absence of the right expertize with most Banks, the pricing could be majorly flawed. Though there are no published figures available, our sources at some Insurance companies say that it is an incessantly "bleeding portfolio". We believe, any contract, in any field, which is not win-win,does not work in the long term.
- Group Products are negotiated year-on-year at the time of renewal. A Bank could change the Insurance Company, or the Insurance Company could withdraw the cover, at the time of renewal. A change in Insurance Company can bring in change in terms and conditions.
- Many Banks have now started their own Insurance Companies (Union Bank of India, Allahabad Bank, HSBC, Bank of Baroda, SBI). Such Banks have ceased tie-ups with existing Insurance Companies and moved to being associated with their own Insurance Company. Such changes have affected long term benefits and medical covers for people.
- Though, there are some banks which have negotiated fixed premium for a tenure of 3 years, after a span of 3 years, the premiums could be revised upwards, benefits curtailed or new conditions brought in, looking at an adverse Claim Ratio (Claims made by the Group against the premium paid). This could severely affect your long term planning for Health Insurance.
- Most of these products have a Renewal Ceasing age. In our opinion, with advancement in medical science, and increase in the mortality age, if you have a choice, it would not be advisable to buy any product which does not offer lifetime coverage.
- Service Issues. This is a big one. Ask anyone who has a bank mediclaim, and has made a claim, phew...its a task managing claims for such products on your own. Banks being banks, will not provide any service for claims, and you wont have a personal agent or broker who would follow up, run around and help you settle your claim. The customer has to deal with the TPA on his own, which could be a daunting task and a stress on your already busy schedule.
- No Tax Benefit: Bank Mediclaim products being a group category, the proposer in the policy is the Bank, and hence, in most cases, you would not be able to enjoy Tax Benefits u/s 80D on such a product.
Final Take on Bank Mediclaim?
Bank Mediclaim is not a long term solution to cover the risk of large hospital/healthcare expenses in the future. The product is not suitable for the young, hale and hearty, who have a good choice of better long term products to choose from. We would recommend Bank Mediclaim to ONLY those do not have a choice.