The Insurance Regulatory and Development Authority of India (IRDAI), on January 2, issued a circular mandating health and general insurance companies to offer a standardised product that will take care of the basic requirements of policyholders.
According to IRDAI, the policy will be named as Arogya Sanjeevani Policy, succeeded by the name of the insurance company. The regulator said, no other name is allowed in any of the documents. Insurers will have to start offering the policy from April 1, 2020.
“It is a welcome move to increase penetration in the lower-middle-income segment as this will come with a facility of paying a premium in instalments. Thus, making it an attractive avenue for people as it will not only be easy on their pocket but will also give them enhanced coverage. Moreover, since all the insurers have been directed to have the same coverage and exclusions, it will be simpler for the customer to understand,” said Gurdeep Singh Batra, Head – Retail Underwriting, Bajaj Allianz General Insurance.
According to IRDAI’s guidelines, issued on January 2, these are the key features of the Arogya Sanjeevani Policy.
- Health insurance policy to take care of basic health needs of insuring public
- To have a standard product with common policy wordings across the industry
- To facilitate seamless portability among insurers
The health insurance plan will have the basic mandatory covers as specified under the guidelines which will be uniform across the health insurance sector. The following health insurance plan will be offered on indemnity basis, as a standalone product. It will not be combined with defined benefit-based insurance covers such as critical illness covers and so on.
Here are 10 things you should know about the health insurance plan, as per IRDAI:
1. Minimum and maximum sum insured: The minimum sum insured under the health insurance plan will be Rs 1 lakh and the maximum sum insured limit should be Rs 5 lakh (in multiples of 50,000). In the case of individual health policy, the sum insured will apply to each individual family member and in the case of the floater health insurance plan, the sum insured will apply to the entire family.
2. Eligibility: Minimum entry age is 18 years and the maximum age at entry is 65. However, there is no exit age. The policy is subject to lifelong renewability. Biresh Giri, Appointed Actuary, Head of Product Development & CRO, Acko General Insurance said that a proposer with higher age can obtain a policy for the family without covering one’s self.” The policy can be availed for self and the following family members:
1. Legally wedded spouse
2. Parents and parents-in-laws
3. Dependent children (i.e., natural or legally adopted) between the age of 3 months and 25 years. If the child is above 18 years of age and is financially independent, he or she will not be eligible for coverage in the subsequent renewals.
3. Policy period: The health insurance plan should be offered with a policy term of one year.
4. Modes of premium payment: All the premium payment modes are available, that is, you can pay the insurance premium either annually, half-yearly, quarterly or in monthly mode. There will be uniformity in premium pricing. Also, the premium under this health insurance plan will be pan India basis. No geographic location/ zone-based pricing is allowed.
5. Grace period for premium payments: For yearly premium payment mode, a fixed period of 30 days is to be allowed as Grace Period. However, for all other modes of payment, a fixed period of 15 days grace period will be allowed.
6. Expenses to be covered: The expenses incurred on treatment of cataract will be covered up to 25 percent of the sum insured or Rs 40,000 whichever is lower, per eye. Dental treatment necessitated due to disease or injury. Plastic surgery necessitated due to disease or injury, all daycare treatments and expenses incurred on road whereby ambulance cost subject to a maximum of Rs 2,000 per hospitalisation.
7. Free look period: The insured will be allowed a period of at least 15 days from the date of receipt of the policy to review the terms and conditions of the policy and to cancel the policy if not acceptable.
8. Co-pay: Fixed co-pay of 5 percent on all claims will be applicable across all the ages.
9. Cumulative bonus (CB): Sum insured (excluding CB) will be increased by 5 percent in respect of each claim-free policy year, provided the policy is renewed without a break subject to maximum of 50 percent of the sum insured. If a claim is made in any particular year, the cumulative bonus accrued may be reduced at the same rate at which it has accrued.
10. Specific waiting period for certain disease: According to the guidelines issued in a circular:
A. “D isease which will have a waiting period of 24 months. Benign ENT disorders, Tonsillectomy, Adenoidectomy, Mastoidectomy, Tympanoplasty, Hysterectomy, All internal and external benign tumours, cysts, polyps of any kind, including benign breast lumps, Benign prostate hypertrophy, Cataract and age-related eye ailments, Gastric/ Duodenal Ulcer, Gout and Rheumatism, Hernia of all types, Hydrocele, Non-Infective Arthritis, Piles, Fissures and Fistula in anus, Pilonidal sinus, Sinusitis and related disorders, Prolapse inter Vertebral Disc and Spinal Diseases unless arising from accident, Calculi in the urinary system, Gall Bladder and Bile duct(excluding malignancy), Varicose Veins and Varicose Ulcers and Internal Congenital Anomalies.”
B. Disease which will have a waiting period of 48 months: “Treatment for joint replacement unless arising from an accident and age-related Osteoarthritis & Osteoporosis,” as per the guidelines issued in the circular.
Apart from the factors mentioned above, the health insurance policy also includes expense incurred on hospitalisation under AYUSH treatment; any medical expenses incurred for inpatient care treatment under Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy systems of medicines shall be covered up to sum insured, during each policy year as specified in the policy schedule, are reimbursed under AYUSH.
The plan covers pre-hospitalisation expenses incurred for a period of 30 days prior to the date of hospitalisation, post-hospitalisation expenses for a period of 60 days from the date of discharge from the hospital.
Sub-limit for doctors/room rent, boarding, nursing expenses all inclusive as provided by the hospital up to 2 percent of the sum insured subject to maximum of Rs 5000 per day. For intensive care unit (ICU) charges/intensive cardiac care unit (ICCU) charges all inclusive as provided by the hospital up to 5 percent of the sum insured subject to maximum of Rs 10,000 per day.
What you should do
Insurance experts believe that such a policy is a good entry-level product. “The proposed range of Rs 5 lakh and below works well because the product caters to entry-level health insurance. This product sets a floor for the kind of benefits that insurers are likely to offer. They will, for example, offer much higher sum assured as well. The standardised product is an addition to the current portfolio of health insurance products. Benchmarking the standardised product across insurers is relatively easier because the only variable will be price,” said Kapil Mehta, CEO, SecureNow.in
However, some believe that the insurance coverage of Rs 5 lakh is not enough. “A Sum Insured of Rs 5 lakh may not be sufficient to address medical expenses especially in tier-1 markets but it definitely is a good entry point for individuals to enroll,” said Anuj Gulati, MD & CEO, Religare Health Insurance.