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No insurance scheme can remain sustainable by making some people subsidise the premiums payable by the people with some major ailments (or history of major ailments). That affects the health of the insurance companies severely. Incurred claims ratios of health insurance industry is as high as 89.34% (according to Irdai annual report), with all PSU insurers suffering underwriting losses. The government is all set to launch National Digital Health Mission (NDHM) which enables all citizens to possess digital health records. Unique Health ID will be allotted to each person and a Health Card will also be issued facilitating people to share the data with healthcare providers anywhere in the country and get the necessary medical attention. While this should usher in a new era in the healthcare sector, this can also be a boon to the insurance industry.

Today, the insurance industry functions with health data that are incomplete and inaccurate. But, in the insurance industry, the data is the product itself. All actuarial calculations are based on historical data. The premiums chargeable to standard lives (as mentioned in product brochure) are not the same as the premiums that are chargeable to people with health impairments

Concealing material facts
Usually, people with adverse medical history have to pay higher than standard premiums. In most cases the insurance intermediaries encourage people to suppress adverse medical history and declare themselves as hale and hearty. More than 90% of the proposals fall under this category.

Concealing material facts about health and habits do not serve anyone. If claims arise and the insurers fail to establish suppression of material facts, the claims are paid. But, such malafide claims are actually settled at the expense of other customers who disclose material information honestly. If the insurer can show evidence of suppression of material facts, the claim is rejected.

Now that the health records of all citizens will be available in digitised form, there should not be any scope to conceal material facts. Although the primary reason for digitisation of health data is to enable people to share history of treatment with doctors and hospitals, the people also stand to gain by sharing the data with the insurers while buying health or life insurance products. When the data are shared with insurers, people help the insurers to arrive at the right premium payable for the insurance cover and that enables the insurer to charge appropriate premiums and settle claims without much hesitation.

When health records are shared with insurers, there is every possibility that the premiums payable by people with better health conditions will come down significantly and people with some health impairments required to pay extra premium.

Wellness benefits
When health data of individual customers are known, the insurers can take a lot of measures to improve the lifestyle of the customers and such measures can be customised for each customer. That will reduce the incidence of diseases and claims. If insurers can monitor the health and habits of customers through wearables and other tech enabled systems, they can guide customers to switch over to better lifestyles. Irdai has already allowed insurers to provide such wellness benefits to customers of health insurance products. They can extend this provision to life insurance sector as well. Digital health records can enable not just quicker settlement of claims but also prevent risks and building a stronger nation.
Soon, you may be able to invest in Index Linked Products to be offered by life insurance companies. The IRDAI has set up a working group on Index Linked Products to examine the various aspects of Index Linked Products in the life insurance segment.

The Authority in its recent circular has stated that it is in receipt of requests from life insurers to allow them to offer index-linked products. As per the IRDAI rules, product regulations do not specifically permit insurers to sell index-linked products.

As of now, in Ulips, one may invest in any of the fund options representing various asset classes such as equity or debt. However, the funds are actively managed by a fund manager and are benchmarked to an index. On the contrary, in an index-linked fund, there is no role of the fund manager. The investments in index funds mirrors the index that it tracks in the same weightage as per the index. The performance, therefore, is similar to the index which the fund tracks. The fund management charges, therefore, are very low in them compared to actively-managed funds.

The terms of reference of the Working Group are as follows:

-To examine the need for index-linked products in India especially with respect to availability of various indexes and how it will better serve the needs and interests of customers relative to traditional savings products.

-To examine the Index linked products, which were earlier available for sale in the Indian market in terms of product structure, ease of customer understanding and administrative processes, sales volumes and any other matter of relevance.

-To study practices of other jurisdictions in respect of Index Linked product structure and their operations.

-To provide recommendations on specific aspects like product structure and its pricing and reserving along with suggestions on possible amendments to the current regulations like Product and Investment Regulation.

The ongoing Covid-19 pandemic has reinforced the absolute criticality of having health insurance protection for your family. Serious medical emergencies of any kind at a time of skyrocketing hospitalisation expenses can easily ruin our finances – something that can be avoided with adequate medical insurance cover for ourselves and our dependent family members.

However, one might never be sure how much coverage could be considered “adequate”, especially in the long term. What seems “adequate” today may be insufficient after a few years, and your existing sum insured might not be enough to meet the hospitalisation requirements of all the insureds in your family. A cost-effective way to protect against future medical requirements and beat medical inflation could be going for a super top-up health insurance policy. Let’s understand how a super top-up plan can benefit us.

Features of a super top-up health policy
A super top-up insurance product is similar to a regular health product in many aspects like covering the insured against hospitalisation bills and medical expenses, but they are different in terms of coverage initiation. Super top-up coverage starts after your cumulative eligible medical expenses exceed the deductible limit mentioned in the policy. It means you have to pay for medical/hospitalisation expenses up to a specific limit (i.e. the predefined deductible limit) from your pocket or through your regular health policy to activate the super top-up policy which will then cover the excess amount up to the policy coverage limit.

For example, suppose you have taken a super top-up health policy of Rs 10 lakh with deductible of Rs 5 lakh. You also have a regular health policy of Rs 5 lakh. Let’s suppose you’re hospitalised on three occasions during the policy year wherein the bill was Rs 4 lakh during the first time, Rs 3 lakh during the second time, and Rs 4 lakh during the third time. Now, your regular health policy (worth Rs 5 lakh) will cover your first hospitalisation. However, your regular policy will not be able to cover for the second hospitalisation in full as you’ve already claimed Rs 4 lakh for your first hospitalisation. As such, you will use the remaining Rs 1 lakh from your regular policy, and the remaining Rs 2 lakh claim will be settled by your super top-up policy. The third hospitalisation bill of Rs 4 lakh will be completely taken care of by your super top-up policy as you have already fulfilled the deductible limit clause.

Super top-up policies come at a very low premium primarily owing to the deductible clause. Also, premiums paid for a super top-up policy are eligible for tax deduction benefits under Section 80D of the I-T Act. The norms and waiting periods for pre-existing conditions and limitations for coverage of specific illnesses are usually similar to regular health policies. Most of the health insurance companies allow cashless claim benefits on their super top-up policies. Also, super top-ups come with different deductible limit options depending on your policy and the insurer, and they are available in individual as well as floater variants.

How super top-up policies differ from top-up insurance

Both super top-up and top-up plans settle claims above a predefined deductible limit by offering excess coverage at a low cost. However, they differ in how the claims over the deductible limit are entertained. While top-up plans do so on a single-case basis, super top-up plans do the same on a cumulative basis. To understand this, let’s check another example. Let’s assume you have a regular health insurance plan of Rs 5 lakh (which is also the deductible limit) and a top-up or super top-up plan worth Rs 10 lakh. If you are hospitalised on one occasion during the policy year and the bill is Rs 8 lakh (which is Rs 3 lakh more than your regular medical insurance coverage of Rs 5 lakh), your top-up plan will be able to reimburse the remaining Rs 3 lakh. However, let’s now assume you were twice hospitalised during the policy year and your bills were Rs 4 lakh on each occasion. While the first claim can be settled with your Rs 5 lakh regular health insurance plan, your top-up plan will be of no use to settle the second claim as the bill is lower than the deductible limit. However, if you have a super top-up plan, you’ll be able to claim the second bill of Rs 3 lakh through it as your cumulative hospitalisation expenses of Rs 8 lakh are more than the deductible limit of Rs 5 lakh but less than the super top-up sum insured of Rs 10 lakh.

Important things to keep in mind when getting a super top-up health policy

When getting a super top-up policy, make sure that you opt for the right deductible limit. Ideally, that should be the limit of your regular health insurance cover. You should also check the list of hospitals available in the super top-up policy which might be different from your regular policy’s list if purchased from a different insurer.

Also bear in mind that there are some benefits that a regular health policy may not allow you if the coverage amount is too low. For example, air ambulance facilities and uncapped room rent coverage may not be allowed in a low-coverage regular policy. Such a policy may also put riders in the treatment of certain diseases. So, your basic health insurance policy size should be adequate to allow coverage for facilities that you may need at the time of hospitalisation. Once you know the size of your base health policy requirement, you can get a super top-up of adequate size by putting deductibles as per your base policy limit. Other critical considerations while selecting a super top-up plan include options like reload/restoration facility, no-claim benefit, maximum pre, and post-hospitalisation coverage, cover for the organ donor and the option to renew the policy for a lifetime. In conclusion, you’ll be well-advised to compare your options thoroughly wherein the premium cost shouldn’t be the only consideration. You must also check the coverage amount, network hospitals, comprehensive protection benefits, and claim settlement records before finalising a particular super top-up policy.

The hunt for a coronavirus vaccine is underway across the world. With multiple vaccine candidates entering the phase III trials, a safe and effective vaccine against coronavirus infection could become a reality soon. But will a COVID-19 vaccine be covered under health insurance policy? The answer is — only specific health insurance policies will bear the expenses of the coronavirus vaccine.

A regular health insurance policy usually covers hospitalisation expenses along with pre-admission and post-discharge bills. If a person tests positive for coronavirus, gets hospitalised for treatment and administer a vaccine, the vaccine expenses will be covered by all the health insurance policies. However, all those who want to get a dose of COVID-19 vaccine, do not require a stay in the hospital. For those, only the health insurance policies that cover out-patient department, will cover vaccination costs.

In case, the customer has opted for out-patient treatment cover after payment on additional premium, vaccination taken as a preventive measure will be covered.

For instance, under ICICI Lombard’s iHealth Plus plan, the policy covers for routine physical and preventive examination, vaccinations, education, consultation and training programs such as nutrition tips, and exercise guidelines and pandemic preparedness in terms of providing necessary drugs and equipment to protect the insured for an additional premium (under wellness and preventive care clause).

Health insurance policies that come with OPD cover usually cover doctor’s consultation fees, pharmacy bills and vaccination cost. But they are expensive than usual health insurance policies. Several companies have launched various insurance products to fight against coronavirus since the outbreak. These new plans have options to cover the cost consumables like PPE kits to home treatments. So there is a chance that vaccination can also be included under the policy, if needed in future.

Currently, COVID-19 vaccination is not covered under indemnity plans available in the industry. However, in the foreseeable future, it being a critical need, we will evaluate covering it under our plans, once the COVID-19 vaccine availability and pricing comes in.

Source : Livemint, Economic Times
Please mark all your queries / responses to
Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. , its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.