Types of Health Insurance Plans offered in India today
It costs money to stay healthy, but it is even more expensive to get sick, goes a popular saying. With healthcare inflation outpacing the overall inflation by a fair margin, this is much closer to truth than we realize. The cost of healthcare services continues to grow at almost double the pace of other goods and services put together.
Given this scenario, it is now unviable to spend from out-of-pocket to take care of your medical expenses. However, in India, out-of-pocket expenditures account for 67% of the total healthcare expenditure, according to National Health Account Estimates 2014-15. This needs to change and private health Insurance, which accounts for just 3.7% of the healthcare expenses, has to share a more significant burden of the mounting healthcare cost.
There are 4 different types of health insurance plans available today. It is no longer limited to just an indemnity plan that covers the hospitalization expenses. Here’s a lowdown on the different types of health insurance plans available:
1. Indemnity or Mediclaim Policy: This is a basic type of health insurance product. An indemnity plan covers the cost of hospitalization. The basic requirement for a claim is 24-hour hospitalization. Some of the expenses pre- and post-hospitalisation are also covered. An indemnity plan either reimburses your hospitalization cost or makes it free through its cashless feature.
2. Hospital cash benefit: While an indemnity plan covers only hospitalization expenses, you need to have additional cash to attend to many other expenses not directly linked to hospitalization. This is the time when a hospital cash benefit plan comes in handy. A hospital cash benefit plan gives a fixed daily cash payout, typically in the range of Rs 1,000 to 3,000 each day of the hospitalization, depending on the premium paid.
3. Critical Illness Cover: The prevalence of critical illnesses like cancer and heart diseases are on the rise. Given the high incidence of critical illnesses, the limited coverage provided by indemnity plans, which covers only hospitalization expenses, is not sufficient if you or anyone from your family is diagnosed with a severe disease, like cancer. A critical illness health insurance plan, which gives a one-time lump sum amount in case of detection of any specified critical illness, can be the right cover for you. The lump sum amount depends on the sum assured opted under the plan. A critical illness cover is offered as a rider with a life insurance policy or as a stand-alone cover. Typically, they cover 20-30 critical illnesses. Bajaj Allianz Life has recently launched a critical illness cover which provides covers for as many as 36 illnesses and depending on the variant that you opt for can provide cover to six family members.
4. The Combo Approach: As you can see, each of these products serves a specific purpose and one-size-fits-all approach is going to be counterproductive. The key is to go for a combination of two or more types of healthcare insurance products since no one product will be able to cover all your medical and healthcare needs. While health insurance can take care of your hospitalization expenses, critical illness cover is crucial to help you fight long term treatment of Non Communicable Diseases (NCDs), where the treatment is spread over a long duration. Hospitalization is a very small component of the entire treatment and it is the ancillary costs like therapy, transportation, medicines, change in lifestyle, which increase your expense. Critical illness can also result in loss of income of the policyholder. A lump sum amount is then crucial to handle the expenses and face the disease head-on.
By using all the above plans in combination, one can effectively cover most of the healthcare expenses. This should also enhance the credibility of and dependability on health insurance in the long run.
The plain vanilla approach of purchasing a health insurance plan is passé. There are various options available and one should evaluate one’s requirement before making this crucial decision. It is best to for a combination of two or more types of health insurance to be able to get a comprehensive cover, which will ensure that we spend our savings to move closer to our life goals and not on medical bills.