Name of the product
IndiaFirst Life Insurance Co. Ltd’s Money Back Health Insurance Plan.
What is it?
It is a unit-linked health insurance plan that covers your hospitalization expenses and also invests your money in funds of your choice.
What do you get?
Just like a basic health insurance plan, this, too, covers you for hospitalization expenses. If you choose a regular premium paying option, the tenor will be 10 years; for a single premium paying option, the term is five years. The sum assured you choose is available for each year during the term of the policy, but the maximum sum assured you can use is five times the annual sum assured. Once you cross that limit, the policy terminates and you get the fund value. On maturity you get the fund value; on the policyholder’s death, the beneficiary gets the fund value and the unused health insurance charge during the year.
Watch out for: There are pre-defined caps on the amount you can claim for some of the benefits. For instance, the doctor’s fees is capped.
You can take this plan as an individual, or include your family through the floater option. The floater will cover your spouse, two kids and parents. A floater plan considers all the members covered as one single unit and the sum assured floats on all the members.
What are the costs?
For the regular premium option, the premium allocation charge is 13% in the first year and 2% subsequently. Policy administration charge is 1.8% of the annual premium and the fund management charge for all funds is 1.35%. The cost of health insurance will depend on the age and the sum assured chosen.
The charges in this policy are on the higher side. While the health insurance charge is comparable with what other health insurers charge, other charges drag down the return. For instance, if a 35-year-old buys this policy for a sum assured of Rs 5 lakh, he will need to pay a regular premium of Rs 33,300. On maturity, he will get around Rs 3.8 lakh, assuming the fund grows at 10% per annum. The net yield on this plan comes to just 2.38%.
Mint Money Take
The costs are fairly high and the health benefits have sub-limits. We recommend you keep the two needs separate. Buy a health insurance plan that covers your hospitalization expenses up to the sum insured and park the balance in a Public Provident Fund (PPF) or an equity fund. Assuming the same cost of health insurance taken in the example above, if the individual had invested the difference in a PPF giving 8% return, the individual would be richer by Rs 35,312.