Buy Health Saving Plan to enjoy health insurance & savings

Life insurance companies offer long term health saving plans which club health insurance with savings. General insurance companies are now entering this space to enhance options for insurance buyers.

Insurance, as the saying goes, is only an assurance. Yet, a growing section of health insurance customers now also expects their premium money to earn while it protects and insures. Health Savings Plans is one such investment and insurance optionthat lets you save a part of the money that you are spending for health risk coverage. In other words, it promotes a savings account for your health coverage.  

Health Savings Plans by Life Insurers  

Some life insurance companies in India are offering long term health plans, providing lump sum cash payment at the time of claim irrespective of the actual expenses incurred during your hospital stay. HDFC Life Health Assure Plan, Reliance Easy Care Fixed Benefit Plan, Bharti AXA Life Loan Secure and LIC’s Jeevan Arogya are the popular ones in this category.  

With ULIPs regaining lost popularity, life insurers have gone one step ahead by providing Unit Linked Health Care Plans or Money Back Health Insurance Plans, combining investments and health insurance. The popular plans in this category are ICICI Prudential's Health Saver, Birla Sunlife's Saral Health and LIC's Health Protection Plus.  

Health Savings Plans by General Insurers  

General insurance companies currently provideonly traditional health care policies. When compared to these lump sum pay methods and money back plans of life insurers, they do not offer any long-term plans or similar attractive offerings.  

Now with the passing of the Insurance Amendment Bill 2015, the health insurance segment can now offer stand-alone products with long-term plans. A slew of innovative products are expected in this segment in the coming months. With a higher FDI cap now, some new health insurance companies too are expected to set their foot in India with Health Savings Plans, which are popular in the West.  

Cigna TTK is the first to announce a Health Savings Plan in the general insurance segment in India, though the specific contours of the product are yet to be revealed.  

How it works  

Unit Linked Health Plans (ULHPs):Like mutual funds, ULHPs are managed investments, where you can allocate your invested amount in different funds based on your risk appetite. One can choose the premium they wish to invest and enjoy the assured Sum Insured as per the plan’s provisions. The premium payment period varies for different companies, ranging from 5-10 years and the coverage offered in most cases is life-long.  

As an instance, in ICICI Prudential's Health Saver, one can opt for an annual coverage of Rs. 2 lacs, Rs. 3 lacs, Rs. 5 lacs, Rs. 7 Lacs or Rs. 10 Lacs, and pay the premium as per the recommended slab. The minimum premium payment period is 5 years and coverage is lifelong.  

Health Savings Plans (HSPs): Health Savings Plan offer a blend of an investment account as well as a health cover. Under this, a part of the premium is allocated towards a savings or investment account, while the rest is utilized towards offering a protective cover. While the exact percentage of allocation towards savings or investments and health insurance will vary from company to company, typically a health savings plan would allocate 30-40% of the premium for savings.  

As an illustration, let us say you need health coverage of only two lakhs as your employer also insures you. So, if you are opting for a health savings plan, 30-40% of the premium may go towards a saving account, and the rest would offer cover against medical expenses.  

In both plans, the money invested in the savings account can be used to cover any related medical expenses that are not covered under a traditional medical policy, like doctor’s consultation fees, post-hospitalization expenses, treatments for pre-existing illness, or similar.  

Where do they invest?  

The money accumulated in the savings account for the health savings plan is invested across bonds and equities to earn returns on investment. In case of a ULHP, investors can either choose their funds as per their risk appetite or go by the recommendations of the fund manager.  

As this is a new concept in general insurance, the jury is still out on the extent of equity exposure versus investment in government bonds that health insurance companies would resort to. However, the policyholder is sure to reap decent returns on their investments.  

Health savings plans can never be a substitute for your investment needs, or coverage needs for that matter. On the other hand, there are certain deductibles in health insurance–exclusions pertaining to pre-existing diseases, doctor’s fees, etc. These can be covered through a health savings plan as you can use the money pooled.

Source: moneycontrol.com

How about railway insurance of Rs 10 lakh for a premium of Rs 25?

Imagine paying Rs 22 for a 24-hour train journey (apart from the ticket fare, of course) and getting Rs 5 lakh as accident compensation, Rs 5 lakh in case of hospitalisation arising out of a train accident and Rs 50,000 for baggage loss?

How will it work?

The time period of a journey itself has been divided into four parts — journeys of about eight hours, those up to 24 hours, up to 36 hours and the ones above 36 hours.

For example, for an insurance of Rs 2.05 lakh, which consists of Rs1 lakh each for accident and hospitalisation and Rs 5000 for baggage loss, the premium comes up to Re 1 for an eight-hour journey, Rs 1.25 for a 24-hour journey, Rs 1.50 for a 36-hour journey and Rs 1.75 for a journey above 36 hours.

Similarly, for an insurance of Rs 4.25 lakh, where Rs 2 lakh each is for accident and hospitalisation and Rs 25,000 for baggage loss, the premium comes to Rs 10 for an eight-hour journey, Rs 11 for 24 hours, Rs 12 for a 36-hour journey and Rs 13 for travel above 36 hours.

When is it expected to be launched?

According to IRCTC managing director Dr AK Manocha, the tie-up with insurance major New India Assurance has been done and the final product should be launched in "a matter of weeks". "We will be offering a bouquet of services which those booking tickets on the IRTCTC website can opt for. The insurance will depend on the length, class, etc, of the journey but what we can assure the commuter is that it will be among the best travel insurance services," Manocha told dna over phone.

What's rlys doing to promote the plan?

IRCTC has started distributing forms to travellers in several trains nationwide to get feedback from commuters on what they think of the plan. The three questions that IRCTC has asked passengers is a) if there is need for travel insurance during a rail journey, b) if the sum assured is adequate, and c) if the premium amount is appropriate.

What is the aim of the scheme?

With over 21 million passengers everyday and penetration of IRCTC in rail ticket-booking now over 53%, officials believe that even if a million passengers opt for these services as time goes by, the corpus collected would be huge. The financial model, according to Manocha, is such that the money accumulated goes to New India Assurance, while the railways gets a fixed percentage as revenue-sharing.

Officialspeak

"For the railways, it may be a win-win situation. It anyway ends up paying out of its own pocket a considerable amount as compensation to train accident victims. The travel insurance will only mean that the railways will have a corpus, that too as commuter contribution, to pay insurance for such incidents," said a senior railway official.

Source: dnaindia.com