Cheapiest Mediclaim Policy

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This is the insurance world’s best-kept secret. For the first time ever, Raj Pradhan reveals and analyses the products that can cover you and your family—at the most inexpensive premium.

Five years ago, Jagdish Kumar (name changed)wanted to buy mediclaim for his family. He spoke to many agents to get information on different policies. He found it a challenge to get coverage for his parents at the budgeted premium. That is when someone suggested the family floater mediclaim as an option. The premium rates for family floater policies were a minimum Rs20,000 per year for Rs5 lakh sum insured (SI). Jagdish thought of settling for a lower sum insured, to remain within his budgeted premium.

But then he happened to visit a nationalised bank for some routine bank work and discovered something startling. The bank was offering family floater mediclaim (including coverage for parents) for an annual premium of Rs12,000 to its customers. The insurance policy was from a government insurer. There were no medical tests; premium rates were not age-specific; there was no co-pay (the part of the medical expense to be borne by the policyholder); and no loading (premium increase) in future years due to claims. The bank manager was not hard-selling the product, unlike unit-linked insurance plans (ulips). It seemed to be a perfect match for his requirements and he signed up to ensure that his family is protected for healthcare costs.

Soon, he realised that the insurance cards he was supposed to have received from his third party administrator (TPA) had not reached him. These cards were an important document proof for getting cashless services during hospitalisation. The policy was supported by only one TPA and, hence, there was no option of getting a TPA of his choice. It took a long time and a lot of calls and continuous follow-up with the TPA based in another city to get insurance cards. The next hurdle was at the time of policy renewal. The auto-debit feature did not work. Jagdish issued cheque payments before the expiry of the policy. The cheque had to be from the same bank as the policy was only for accountholders. In the following year, Jagdish did not receive a renewal letter. However, he remembered the expiry date and sent the premium payment well in advance. The insurer did send him an acknowledgement of the premium receipt each year and, hence, it was the proof of continuous policy coverage.

Earlier this year, Jagdish’s father had to undergo a minor surgery. He found that the insurer did not offer cashless facilities at his chosen hospital. Nevertheless, Jagdish decided to opt for reimbursement and went ahead with his father’s surgery. The claim was submitted on time, but getting the payment was a hassle and needed many calls to the TPA’s office over a period of three months. After nearly three months, Jagdish received his claim payment and was relieved. He soon realised that the insurer had hiked the premium by 30% for all customers. It did pinch his pockets, but he felt it was understandable, since the hike had come after a period of five years. The altered premium rates were still 20% lower than the market rate for retail mediclaim. Jagdish does not want to let go of the policy at this juncture.

He and his family have served their mandatory waiting time with the policy and now they don’t have to worry about pre-existing disease (PED) coverage. Neither are they pinning too much hope on mediclaim portability that is supposed to commence from October this year.

Best-kept Mediclaim Secret
No, the story has no catch. One of the best-kept secrets of the insurance industry is the extraordinary mediclaim deals that you get from nationalised banks. To repeat: coverage for the family, no tests and no escalation. We have checked what’s available and are happy to report that for unbelievably low premium rates, you are getting great health covers. A family floater covering the account holder, spouse and two children of Rs5 lakh sum insured is available for a premium of just Rs7,000. It is a steal. The premium for a majority of them have not risen in many years and is often still 50% lower than buying the policy directly from the insurance company.

In an era of high healthcare inflation and corresponding mediclaim premium hikes, it is unreal to find policies with premium that is 50% lower than the market rate. What is even more unbelievable is that the premiums are the same for all ages; there are no medical tests; no increase in premium due to claims (loading); parents can be covered; no co-pays; entry age up to 65 years (even up to 80 years in one case); coverage is up to age 80; and the benefits as good as (or even better than) those of retail policies sold directly by insurers. The best part is that one only has to be a bank accountholder to get these products. These are good options for those who don’t mind a little bit of inconvenience in service and are prepared for a reimbursement of claim instead of a cashless facility, despite the fact that a cashless facility will be offered for hospitals on a preferred provider network (PPN).

We know of a veteran agent working for united india who himself had a United India policy. He took a family floater mediclaim from the bank where he had an account and stopped the United policy. Of course, service is poor sometimes. As long as you are able to tenaciously work your way through the system, the bank mediclaim options are worth exploring.

Why hasn’t anyone told you about this?
Banks have not trained their branches to sell them. There is lack of commission for bank employee to sell mediclaim. Most branches did not have the product brochures. In other cases, the bank staff hand out brochures without knowing what they are selling. We tried to get a soft copy of these brochures by email or download it from various websites, but could not. A bank employee who knew about the policy believes that customers should not be encouraged to open an account just to benefit from the mediclaim. According to him, “It should be the other way round. Bank mediclaim should be an additional benefit for doing business with the bank.” But there is nothing much banks can do to stop a person from opening an account with a minimum balance just to get the benefit of these products. Isn’t that so?

Who should go for it?
Bank mediclaim products are beneficial for young families that can build a track record of paying premium and may have no claims in the initial years. It will also benefit them to add parents to the plan if they have missed the boat and have not taken mediclaim when they were younger. Buying individual mediclaim for parents is expensive. Children can be easily added to family floaters. When the children turn into adults, most insurance companies will have the option to move them to an individual policy, so that the PED waiting period does not start afresh.

Senior citizens not having an existing mediclaim policy can opt for bank mediclaim as the entry age is up to 65 years. It is better to have some mediclaim policy rather than not having any mediclaim. In the absence of an agent/broker, it will be advisable to educate yourself about the policy wording, claim filing, TPA communication and so on.

The premiums are low for bank mediclaim, but Advisors would not encourage a senior citizen who has an existing mediclaim to move to these products, unless they are in really good health (which in itself is difficult to know) or can’t afford the existing mediclaim premium. There is value in having a track record of premium payment to the insurance company (private or public) which will work in your favour when you make the claim. Most bank mediclaim products don’t need a medical test and they rely on self-declaration. It is a double-edged sword. It may be easy to get in but insurance companies can pick up a dispute in self-declaration while dealing with a large claim from the elderly.

According to Nagesh Kini, a chartered accountant, who has been a statutory auditor of general insurance Corporation of India and four insurance companies, “I had an account with Citibank which offered ‘Good Health’ mediclaim from New India Assurance at a 45% discount. I renewed the policy for 15 years. There were issues related to getting a renewal notice; it used to take a few calls to get it. At one time, I did not get the policy document after renewal. A complaint to the insurance ombudsman resolved the issue. The policy document had been incorrectly mailed to a wrong address. There were lakhs of bank accountholders who had mediclaim and, hence, service was an issue.

“Over the years, Citibank has also increased the minimum balance requirement for its Suvidha account. I decided to move to a retail policy from New India Assurance. After making a request, I was given a certificate for continuation which enabled me to continue without a PED waiting period. I did not have a single claim and that could also have worked in my favour. I did end up paying higher premium.”

Choosing the Right Bank Mediclaim
We have highlighted the pitfalls, but there are more, according to Rohan Dukle, director, Magus Corporate Advisors, “I don’t recommend bank mediclaim because of the lack of portability to retail mediclaim policy (unless agreed upon by the same insurance company), just like corporate group mediclaim cannot be ported to retail mediclaim in most cases. The customer is better off with retail mediclaim of an individual or a family floater—even if it is more expensive. The service quality of bank mediclaim products will be an issue.”

Bank mediclaim is good as long as you are fine with the family floater concept. You can consider the following parameters to help in getting the correct product based on your requirement. The sum insured is between Rs50,000 and Rs5 lakh (except for punjab national bank–oriental insurance with Rs1 lakh to Rs5 lakh). According to an official of Catholic Syrian Bank, “We have a mediclaim product through New India Assurance for over five years offered to customers and our staff. The premium rates are low and have not increased till now. There are no medical tests, but we tell customers to submit a self-declaration of medical condition in utmost good faith. TPA Mediassist India has been issuing cards on time. Our employees make our customers, who walk in, aware of the product.”

The premiums are low due to the volume of annual premium business generated by the bank for an insurance company. A senior official with a government insurer says, “Bank mediclaim has not affected our normal sales which may be due to lack of awareness. Service could be an issue. We have taken a conscious decision to not allow parents in the family floater policy. Some banks which allow parents have high claims ratio and the insurer may follow up with increase in premium.” Here is a comparison of the different products available.

Premium: Indian Overseas Bank (which offers Universal Sompo insurance policies), which had the same low premium for any age group, now has different premiums for various age bands. It is expensive for the higher age group. It is a logical step, but only New India Assurance (among government insurers) has this differential pricing. The others are still offering the same premium for all age groups which, in itself, is incredible. We suggest going with government insurers.
Private insurer Reliance General increased its premium by 500% last year for its ‘HealthWise product’ and left customers really aggrieved.

Coverage: Indian Overseas Bank’s mediclaim covers parents, but the premium is expensive. If covering parents is your requirement, choose from one of the banks offering a united india insurance product.

If covering parents is not your requirement, you can opt for other products since United India Insurance has constraint about intimation within 24 hours of hospitalisation and filing of claims within seven days of hospital discharge. Moneylife came across some hospitals in Mumbai which provide a bill nearly a week after discharge. This is because the bulk of the money is paid in advance and the bill is prepared after the residual charges are consolidated from different departments in the hospital. A policyholder ends up getting caught between the hospital’s timeframe for submitting a bill and an insurer’s claim for filing deadline of seven days. Intimation within 24 hours of hospitalisation is sometimes unfeasible.

Entry & Exit Age: Hemant Sharma, chief executive officer, Mediclaim Solutions, claims to have come across a 70-year-old man who wanted to buy mediclaim at a cheap rate. “I suggested that he go for Punjab National Bank–Royal Mediclaim from oriental insurance, which accepts customers till age 80, to enter the policy with an unbelievably low annual premium of Rs6,705. It is a really beneficial product for all ages.”

PED and Medical Test Comparison: The standard clause for PED is a four-year waiting period. Some define it as ‘PED covered after four years of continuous consecutive claims-free period’. Some others define it as, ‘PED covered after four consecutive continuous claim-free years—provided there was no hospitalisation due to PED during these four years of insurance’.

Beware of something like ‘PED clause will not be deleted for ailments of cancer, renal failure, thalassemia, psychiatric disorders and organ transplant’. The most restrictive condition is one which does not cover PED at any time. On the other hand, Punjab National Bank, offering Oriental Insurance–Royal Mediclaim policy does not specify a PED waiting period in the prospectus. According to Oriental Insurance personnel, “There will be standard four-year PED waiting period even if it is not mentioned in the prospectus.”

Many products don’t need a medical test. They rely on self-declaration of the customer regarding his medical condition. It is imperative for customers to provide information about their health in utmost good faith. Even if you don’t have any PED, ensure that the proposal form clearly says so. If the column is left blank on the proposal form or kept vague, the insurer may write a note on your proposal form saying, ‘PED not declared or unclear’ and this will be a major issue when there is a claim to be paid.

With insurers, policies change based on their experience and a medical test may be needed on a case-to-case basis, especially for the older age group.

Additional Benefits: The more the product benefits, the better for customers. If a benefit is specific to your requirement, it is even better—otherwise, many add-on benefits are never used. Please refer to the policy document for a comprehensive list of benefits.

Room Limits, Co-pay and Other Limits: Please note that there will be different limits for surgeries (e.g., cataract surgery), waiting periods for specific surgeries, first-year/second-year exclusions, permanent exclusions and other restrictions that cannot be covered in this article. Readers will have to refer to the policy document to understand the details before buying any mediclaim policy—whether it is through banks or directly from the insurer. Moreover, the policy details may be changed by the insurer by the time you purchase in the future.

The Service Issues
Even if you had purchased a mediclaim through a broker or an agent who promises to help you in claims processing, the onus is on you to understand what is covered/not covered, PED waiting period, specific procedure waiting period, claims filing procedure along with time-limits, procedure for intimating a TPA at the time of hospitalisation, TPA contacts and so on. Some insurance companies have a rule that policyholders must contact them or the TPA within 24 hours of hospitalisation. Insurance companies are also not obliged to send the policyholder renewal notices.

The onus is on the policyholder to be aware of his responsibilities and the fine print in his mediclaim policy. This is true for retail mediclaim or mediclaim from banks. A United India Insurance circular specifies that claim documents have to be submitted within seven days from the discharge date. Any delay up to 15 days can be condoned by the divisional manager. Beyond 15 days, the power to condone has been vested in the hands of the regional officer. Don’t depend on the regional/divisional officer to allow your late filing, as it invariably may not be in your favour. Complying with the rules may be difficult, especially in case of medical urgency. If you really need cashless benefit with your bank mediclaim, you will have to deal with the TPA. Dealing with a TPA is a problem irrespective of whether you are going for retail mediclaim or bank mediclaim. TPAs have earned notoriety in recent times with accusations of misconduct from policyholders, hospitals and insurers.

Whether you are buying retail mediclaim from a broker/agent or going in for mediclaim offered by banks, there can be hiccups in getting your claim passed. An agent or broker can help you only to a certain extent, beyond which you are on your own. Today, there are more claims ending up in litigation than in the past.
Understanding your rights is important. If you purchased the policy in utmost good faith and believe that the policy wordings are in your favour for any claim you have filed, but have got a rejection notice from your insurance company (even after approaching its grievance cell), you have to take the fight to the next level.

Grievance Redressal
There are 12 insurance ombudsman’s offices across the country. It may take up to six months before an insurance ombudsman gives you time for hearing due to the backlog of work. Interestingly, the post of the insurance ombudsman in Ahmedabad has been lying vacant for nine months and, hence, even more cases are piling up. A consumer court may take a few years to grant justice and dual filing (both before an ombudsman and a consumer court) is not allowed. According to an insurance broker, “In many cases, just the first notice from the consumer court is enough for insurance companies to settle the claim. Even if the insurer does not pay and it goes for hearing, we have got the cases settled within a year (this may be an exception).”

According to a veteran insurance agent, “TPAs have overpowered PSU insurers who don’t overturn the TPA decision in most cases. The reason insurance company officers would not take any decision to solve the matter to settle the claim is that they would like to be free from taking any responsibility. If the ombudsman approves the claim settlement, the onus of answering to the audit is taken away from the officer. Often, the ombudsman’s office telephonically talks to the grievance manager and instructs him to settle the matter.”

Which One Should You Buy?
If you feel that a bank family floater mediclaim is the appropriate choice for your requirements, Syndicate Bank’s SyndArogya offered by United India is a good choice that will cover your parents too. The policy has been operational for over six years. The premiums are low with PED covered after three years, which is less than the standard waiting period of four years. The additional benefits include maternity and baby-care expenses up to 5% of sum insured. Health check-up will be paid at 1% of sum insured after three claim-free years. There are no room limits. Treatment is allowed in India, Nepal and Bhutan in Indian currency. The product also covers an inbuilt personal accident policy. United India Insurance offers a choice of seven TPAs empanelled for the policy. United India has constraint about 24-hour intimation on hospitalisation and a seven-day submission of a claim. It has more to do with prevention of fraudulent claims, but it can also adversely impact genuine cases.

If you don’t want to cover your parents, you can go with Punjab National Bank’s Royal Mediclaim policy offered by Oriental Insurance which was launched over one year back. It is also possible to take a policy for you, your spouse & children (Royal Mediclaim–Oriental) and a separate policy for parents (SyndArogya–United India) as long as parents are below 65 years at the time of entry. The total premium will increase by less than Rs2,000. New India Assurance is also a good option, but bank mediclaim premiums are high for the older-age group. The other good options are Bank of Baroda or Bank of India’s mediclaim (Baroda Health and Swasthya Bima, respectively) from national insurance. The policies are running for five and four years, respectively.

Source: moneylife.in