Premium-return health insurance products could be in the market soon, if the Insurance Regulatory and Development Authority (Irda) accords approval to ICICI Lombard General Insurance Co. Ltd for such plans.
Currently, general insurance companies do not return annual premium paid by individuals for policies. If the proposed product gets an Irda nod, you can get the premium you paid refunded after three-four years, if no claim is filed during that time.
“We got an application for the premium-return products but there are a few issues to sort out before approval is given,” said C.S. Rao, Irda chairperson. “If an individual gets the premium back, it’s not an expenditure. We have to deliberate whether such products can get any tax deduction.”
An added attraction of health insurance policies is the tax benefits these plans enjoy under Section 80d of the Income-tax (I-T) Act. The maximum deduction available under this section is Rs15,000, except for senior citizens, who can avail a Rs20,000 maximum deduction limit.
An ICICI Lombard spokesperson declined to comment on the plan because the company hasn’t received any word from Irda yet. “We have always been hearing from insurance companies that claims filed under health insurance plans are 180% of premium collected and the claims paid and settled are 140% of premium collected,” said S.K. Sethi, vice-president and director of Insurance Brokers Association of India.
“Return of premium can be possible only in the form of discount at the time of renewals, in case no claim is filed during the year. Alternatively, premium to be charged would be higher. This means that insurance plans with premium return policy would be suitable only for high networth individuals,” he said.
Experts say health insurance penetration in India is low at 2.5% of the population. Health plans have only 8% of the general insurance market share.
A few months back, ICICI Lombard launched a Health Advantage Plus Health Insurance Policy on the same lines.
In addition to offering basic hospitalization cover for a fixed annual premium of Rs15,000, the policy reimburses up to Rs10,000 for outpatient treatment expenses, such as for medications, ambulance and dental care.