Unlike the current mediclaim and health insurance products offered by general insurance companies that cover the insured's hospitalisation expenses and are annual in nature, LIC's product will be a hospital cash product (that is for major listed surgeries and procedures, LIC will pay the insured a predetermined lump sum amount, depending on his premium payment). LIC's product will also be a long-term product of over 10 years. 

Speaking at the CII Health Insurance Summit, D D Singh, executive director, health department of LIC, said, "The product will be a family floater covering a family of four. It will not have a level premium. The premium will increase with the age of the insured and if more benefits are opted. The pre-existing diseases will be covered, but with some clauses. It will have a health savings account and a unit-linked component attached to it." "The product also cover outdoor patient expenses, there will be limits introduced to ensure overcharging by health care providers."

LIC has selected eight third-party administrators (TPAs) based on their strength in different regions across the country. The TPAs will be issue health cards and will be used only for settling the claims. For claim payouts, the public sector behemoth has tied by with Axis Bank, Syndicate Bank [Get Quote] and Bank of America.

Claim payment will only be through bank branches or through correspondent banks.  To protect data confidentiality of its policyholders, several clauses have been introduced in the tie-ups with TPAs.

Singh also indicated that the government wanted LIC to have a separate company for health insurance which will be subsidiary of LIC.  Munich Re will be the reinsurer for this product. LIC will work with Swiss Re for its other health insurance products.

The product will be marketed in a big way through all distribution channels of LIC including its over 10 lakh agents. So far, Bajaj Allianz Life Insurance Company has a long-term hospital cash product.

A team of 30 people under DD Singh is working on developing several health insurance products. The health department is operated from the Hyderabad office of LIC, which will contain the centralised data.