Health Insurance

What is a health insurance policy?

A health insurance policy is a contract between an insurer and an individual or a group, in which the insurer agrees to provide specified health insurance at an agreed-upon price the premium. Depending on the policy, the premium may be payable either in a lump sum or in instalments. Health insurance usually provides either direct payment or reimbursements for expenses associated with illnesses and injuries. The cost and range of protection provided by the health insurance will depend on the insurance provider and the particular policy purchased. These days, most companies give the benefit of health insurance to the employees. However, in case your employer does not offer a health insurance plan, it is advisable to opt for a health insurance scheme.

Why do you need health insurance?

Health insurance has become a necessity in today’s world considering the rise in the cost of medical care and treatment and the huge population of the country. The escalating cost of medical treatment today is beyond the reach of the common man. Even if an individual is healthy and has never had any major problem, it is not possible to predict what may happen in the future. There is a growing public awareness for better health care and desire to have better health care from private medical providers. In case of a medical emergency, cost of hospital room, doctor’s fees, medicines and related health services all add up to a huge sum. In such times, health insurance provides the much needed financial relief.

Who can avail this facility?

Health insurance can be availed by people aged between five and seventy five (The upper and lower age limits may vary slightly depending on the policy). The health insurance scheme could either be a personal scheme or a group scheme sponsored by your employer.

What does it cover?

In anticipation of unexpected events that create the need for medical goods and services, the health insurance does not cover certain ailments. It does not cover ailments in the first year after the policy is taken. It covers hospitalisation charges for:

• Heart attacks
• Strokes
• Prolonged illnesses
• Loss of limb, eye, or other parts of the body due to accident
• Injuries
• Maternity expenses
• Medicines

What you need to know?

You should understand the policy, and become familiar with common health insurance provisions, including limitations, exclusions, and riders. It is very important to know what your policy covers and what you have to pay yourself. Health Insurance policies generally cover boarding, nursing and diagnostic expenses, which include room rent charged at the hospital or nursing home, fees of the surgeon, anesthetist, doctor, etc. Some policies even offer fixed cash amount for each day you stay at any hospital for treatment. If you have a persistent health problem and then decide to take insurance, it might not be covered. Expenses on hospitalization, incurred in the first 30 days after taking a policy are also not entitled, except in case of an injury from accident. Treatment of certain diseases is not covered during the first year of your policy. The list of diseases may vary form one health policy to another.

What are the main health policies or schemes offered by Indian insurance companies?

Some of the existing health insurance schemes currently available are individual, family, group insurance schemes, senior citizens insurance schemes, long-term health care and insurance cover for specific diseases. Choose the one that suits you best and insure your health.

The insurance policies offered by GIC are:

• Mediclaim Policy
• Personal Accident – Individual
• Personal Accident – Family
• Group Accident Insurance
• Jan Arogya Bima Policy
• Bhavishya Arogya Policy (Insurance for senior citizens)
• Traffic Accident Policy
• Overseas Mediclaim Policy

The Life Insurance Corporation (LIC) offers:

The Asha Deep Plan: It provides cover for cancer, paralytic stroke, renal failure and coronary artery disease.
Jeevan Asha: The Jeevan Asha policy is the other healthcare product offered by LIC

Why does Indian insurance need foreign players?

Competition improves quality of service. In India, LIC and GIC are well-established names. Only companies of equal strength and track record can effectively compete with them. Foreign players will provide expertise.

Some foreign companies entering the Indian insurance sector and their Indian partners are as below:

Indian partner	Foreign Insurer	Specialization	Present Status
Aditya Birla Group	Sun Life, Canada	Life	Received License
Kotak Mahindra Finance	Old Mutual, South Africa	Life	Received License
HDFC	Standard Life, UK	Life	Received License
Reliance	No Foreign Alliance	Non-Life, Health	Received License for Non-Life
ICICI	Prudential, UK	Life, Health	Received License
Max India	New York Life, USA	Life	Received License
Tata Group	AIG, USA	Life and Non-Life	Received License

What changes are likely to occur with privatisation?

Currently, insurance for health care is tied up with only emergency situations. With privatisation it is hoped that health care will come within the reach of a large proportion of the population. It is important to remember that health insurance should now change from providing cover for treating sickness to ensuring the wellness of the consumer. An insurance model must be created with the `Total Health' perspective to not only give access to quality healthcare but also incorporate preventive health care into the main system. Hospitals, different service centres and diagnostic centres needs to be accredited.

In India, approximately 80% of the total health expenditure comes from self-paid category as against government’s contribution of 20-30 %. A majority of private hospitals are expensive for a normal middle class family. The opening up of the insurance sector to private players is expected to give a shot in the arm of the healthcare industry.

Health insurance will make healthcare affordable to a large number of people. Currently, in India only 2 million people (0.2 % of total population of 1 billion), are covered under Mediclaim, whereas in developed nations like USA about 75 % of the total population are covered under some insurance scheme. General Insurance Company, has never aggressively marketed health insurance. Moreover, GIC takes upto 6 months to process a claim and reimburses customers after they have paid for treatment out of their own pockets.

What are the pros and cons of privitisation of health insurance?

Pros	Cons
Flexibility in health insurance products and prices	Supplier induced demand which would lead to increase in cost of care.
Comprehensive and cost effective packages	Risk selection practices where the disabled, poor, elderly would be ignored
Medical plans will be tailored as per the requirement of an individual based on pre-negotiated rates	Exclusion of pre-existing conditions and diseases
Fewer age, disease and benefits restrictions	Monopoly of profit oriented insurance cartel with poor quality products.
Lower premium	Would benefit only a select target audience
Claim settlement would be smoother and faster