How to craft benefits from changes in health insurance plans

Renewing a health insurance policy can tempt a rare strain. Ask 68-year-old Sarayu Arvind Parekh. In 1999, Mumbai-based Parekh bought a mediclaim, for which she paid an annual premium of Rs 14,596 till 2007, an uneventful, claimless period. Then, in 2008, she had to undergo a knee surgery and made a claim.

The shocker snuck up the same year at the time of regeneration, when her premium shot up to Rs 31,833. After last year's eye surgery, it inched up to Rs 41,000. Parekh hasn't quite recovered. Not from the surgery, but the gravity-defying rise of her health premium.

The health insurance sector has been ailing from many such survivals, sustained primarily by insurer domination and lack of awareness. So, besides the rise in premium or even termination of policies during renewal, individual plans do not cover pregnancy or diabetics, doctor consultations are not entitled to an insurance, there's a high waiting period for the coverage of pre-existing diseases, etc.

Such shortcomings have sorely stood out in the evolution of the Indian health insurance, which has seen a slow, albeit healthy, transformation since 1986, when the first health insurance plan, or mediclaim, was launched. The next big milestone came in 1999, with the setting up of the Insurance Regulatory and Development Authority, and the entry of private players and joint players. This infused a rash of regulation and innovations aimed at fairplay and greater benefits for customers.

Though the sector is rocked from time to time by issues and controversies, such as the furore over the cashless mediclaim facility eight months ago, the health insurance scape in India is gradually changing. The latest round of changes have been triggered in the past couple of years by the new entrants whose prescience has resulted in improvisations and new products suited to the consumers.

ET Wealth takes a look at these new developments and how they can benefit you:

Health plans, unlike life insurance, require a renewal of contract every year. Traditionally, this has been a problem area because a heavy claim meant that either your cover was not renewed or the premium was zoomed to tactfully avoid renewal. Now, however, two standalone health insurance companies, Max Bupa Health Insurance and Apollo Munich, are promising lifetime renewals without an unseemly rise in premium or threat of termination.

These insurers are estimating the probability of a person falling ill in a lifetime and then calculating the premium for various age groups. So the product may be expensive compared with a mediclaim, but at least your premium will not shoot up 20-30% during a renewal just because you made a claim. There's hope for Sarayu Arvind Parekh.

In fact, not content with a simple guarantee of renewal, Max Bupa and Apollo Munich are incentivising it. While mediclaim policies typically offer a no-claim bonus for those who do not make a claim in a year, Max Bupa offers a bonus of 10% of the renewal premium in the form of health services and products every time you renew, irrespective of claims.

Source: [ET]