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The Mediclaim alternatives

Freny Patel | August 26, 2003

Medical costs are on the rise -- hospital charges, doctors' fees, medicines and battery of tests all have seen huge inflationary impact.

A bypass today costs anywhere between Rs 150,000 to Rs 300,000. With issues regarding the introduction of cashless hospitalisation yet to be resolved, not many individuals can shell out such hefty sums and then wait for reimbursement by insurance companies under their Mediclaim plans.

Perhaps this is the ideal time to look at what else is being offered in the market today. Private insurance companies are playing a major role with their offers of hospital cash and critical illness covers.

No questions asked, funds are paid upfront and family of the individual patient can rest easy without rushing pillar to post to cough up sizeable funds.

Nevertheless, just about one per cent of Indians have taken Mediclaim insurance cover today and even a smaller percentage of the population has sought coverage under various schemes offered by life insurance players, which are add-ons to the base policy.

Tata AIG Life's HealthFirst plan for instance, is being marketed as the first comprehensive hospital allowance policy. Under this plan, a policyholder can avail of hospital cash allowance of up to Rs 2,500 per day after the third day of hospitalisation for a maximum of 90 days.

This helps take care of incidental expenses like medicines, tests, and even accommodation for the relative staying with the patient. Many life insurers and even general insurance companies offer similar products as a part of a base policy.

Tata AIG Life has tied up with 280 fully equipped hospitals in the country for the benefit of policyholders. After a thorough company-paid medical check-up, an individual can opt for the health plan wherein the premium is calculated on a five-year renewable basis.

A 25-year old female for instance, would pay an annual sum of Rs 1,044 for a period of five years and will have to pay a revised premium from the sixth year.

For this sum, she can avail a lifetime maximum coverage of Rs 250,000 depending upon the size of coverage.

This is different from a Mediclaim policy as it exists today. Under a Mediclaim plan, the maximum coverage stands at Rs 500,000 and this is an annual policy, to be renewed every year.

As things stand today, Mediclaim continues to offer policyholders reimbursement of expenses incurred. The new life companies have taken health cover one-step further by offering money upfront with almost no questions asked.

Most life insurance companies offer major surgical assistance add-ons to the base policy. Tata AIG Life's HealthFirst plan is different.

There is no base plan to be bought, just a health cover. Under the surgical benefit, a lumpsum amount for a surgical procedure covered under a particular plan is paid upfront.

Immaterial of the actual operation cost, the full sum promised is given to the policyholder provided the procedure entails a three-day stay in hospital. Other than that, no questions are asked.

Indeed most life companies have made headways when it comes to offering long-term health benefits.

ICICI Prudential Life for instance, depending upon the categorisation of the surgical procedure, offers 50 per cent of the basic sum assured under major surgeries, 30 per cent for intermediate procedures and 20 per cent for minor procedures.

Tata AIG Life takes it one step further and offers a lumpsum amount of Rs 125,000.

All these benefits can be availed of regardless of having taken out a Mediclaim plan. And the coverage says Tata AIG Life offers policyholders tax benefit under section 80D just as in the case of Mediclaim coverage.

The health plan also offers critical illness riders as in the case of most life insurance companies. This covers certain major illness, wherein upon the diagnosis of the 12-15 critical illnesses, the benefit is paid on the spot.

No questions asked. The illnesses include cancer, stroke, first heart attack, coronary bypass, blindness, Alzheimer's disease, Parkinson's disease, paralysis, among others.

Tata AIG Life offers anywhere between Rs 125,000 to 12.5 lakh (1.25 million) according to the coverage taken.

Interestingly, while it is the new life insurance players who have advertised their offer of meeting long-term health needs, the state insurers like New India Assurance have been doing so for years.

Under its long-term hospitalisation insurance policy, in addition to the benefits offered under the Mediclaim plan, boarding and lodging expenses of one family member or next of kin is included at an additional notional premium.

Further, hospitalisation and operation expenses are payable for the person donating an organ to the insured person during the course of an organ transplant operation.

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