(Illustration: Sudhir Shettty)
(Illustration: Sudhir Shettty)

A standard health cover explained

  • The insurance regulator has proposed guidelines to standardise plans across companies to help customers choose covers
  •  This standard health plan will have basic mandatory covers uniform across the market and there will be no additional addons or optional covers

Mumbai: Do you find it difficult to choose a health insurance plan? In a relief for customers, the Insurance Regulatory and Development Authority of India (IRDAI) has issued draft guidelines to offer a standard health plan by all general and health insurers. Once the guidelines come into effect, all general and health insurance companies have to offer a standard health cover. Here is what you can expect:

The proposal

According to the IRDAI circular, in order to enable customers to choose an appropriate health insurance coverage of their choice, all general and health insurers should offer standard individual health insurance products apart from personal accident and travel covers. Once the guidelines are effective, the customer will be able to identify the product as a standard mediclaim policy along with the name of the company.

Issued under the provisions of section 34 (1) (a) of Insurance Act, 1938, this standard product will have basic mandatory covers which will be uniform across the market. There will be no additional addons or optional covers. Only the basic cover under the standard product is standardised. The regulator has left the decision of the premium to the insurer. Its proposal is to offer on indemnity basis only. The standard product will have standard exclusions and offer mandatory covers such as hospitalisation expenses. Expenses incurred for treatment under Ayurveda, Unani, Sidha and Homeopathy systems of medicines will be covered, but will come with fixed standard sublimits.

Under this cover, periodic consultation of at least once in a policy year will be included. It will also have an option to provide incentive for fitness. Sum insured will be increased by 5% for each claim-free policy period (where no claims are reported), provided the policy is continuously renewed without a break, subject to maximum 50% of the sum insured (excluding CB accrued) under the current policy period. No deductible features are permitted under the base cover.

The standard plan will come with standard co-pay. Co-pay means you will have to pay a certain amount too. Add-ons or optional covers are not allowed to be attached to the base cover.

Is it worth it?

Currently, a majority of health and general insurance companies offer health insurance policies along similar guidelines. However, it is not standardised yet. “There are probably around 30 insurers offering health insurance policies. I think 25 of them will have a product already similar to the guidelines issued in the circular. They may just have to modify a bit and change the name. There will be some insurers who will not have certain variants. For instance, it may not have a co-pay feature. Hence, I don’t think this is a major change, but is a step to create a market benchmark," said Kapil Mehta, co-founder, Securenow.com, an online insurance broking firm.

Though it is an attempt to standardise the plans available in the market, there is still enough flexibility. “Right now, there is a lot of flexibility given to insurers. Ideally, those should also be standardised. For instance, the number of years for preexisting diseases that are excluded could be a standard three or four years. Right now there is no guideline on it," said Mehta.

There is also an inclusion for 5% co-pay which experts think is a good way to avoid frauds. “It is one of the best ways to ensure that there is no fraud. If you have evidence of customer paying money then the chances of fraud comes down," said Mehta.

The basic sum insured amount is set in the range of 50,000- 10 lakh. Right now, most insurers offer policies starting from 3 lakh sum insured. Hence, the 50,000 sum insured will cater to a new category of individuals.

In the current form there is no mention of the cap on room rent. It requires clarification on basic parameters which can be followed by the insurance companies. The regulator is seeking suggestions till 6 March.

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