Productcrack | Unit-linked health insurance plan

Productcrack | Unit-linked health insurance plan

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?

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.

What’s special?

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 5 lakh, he will need to pay a regular premium of 33,300. On maturity, he will get around 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 35,312.