According to experts, the relaxing of tariff controls on fire and engineering insurance is set to have a far-reaching effect on the entire general insurance sector, particularly health insurance.
This would be so as new competition is expected to drive down the premiums in marine, fire and engineering sectors which were hugely profitable and used to make up for loss-making sectors like health and motor insurance. Chief executives of general insurance companies strongly opine that Health insurance (Mediclaim) premiums for particularly group health insurance, could be expected to shoot up.
In any case, it is more reason not to forget to renew an existing Mediclaim policy. Mediclaim provides cover for expenses in case of hospitalization. It takes care of costs incurred during hospitalization and protects the policyholder from pre as well as post-hospitalization expenses.
An added benefit is that if a policyholder has kept the policy for long, it may serve him even better. For instance, a fresh policy does not cover any pre-existing illness. Says Mukesh Gupta, director of Wealthcare Securities, a financial advisory firm: "Not only that, the insured will lose the no-claim bonus as well. Further, his policy will be treated as fresh policy and the first year exclusions will apply again."
This aspect is not to be ignored as if a person has a Mediclaim policy and has made no claims on it for four consecutive years, he will start getting covered for those pre-existing illnesses. In addition, for every claim-free year, the sum assured will be increased by 5-10% - that too without an increase in premiums.
Yet says senior official from New India Assurance: "Most people are unaware of such benefits and that's why they don't attach much importance to renewal, little realizing that all their hard work may go waste."
In other words, if the insured has a health condition existing prior to taking the policy and requiring medical treatment, the same gets automatically excluded in the policy. "To ensure that in subsequent renewals medical conditions incepting since the policy was taken don't get excluded, it becomes a must to renew the policy without any break," he adds.
Renewal of a Mediclaim policy becomes important also since the policy terms have become more stringent. Before April this year, policies covered pre-existing diseases after four claim-free years even if the policy was held with another insurance company. Under the current terms, policyholders need to be covered by the same insurer for at least four years.
There are more reasons why a policyholder should keep continuing his existing policy. For starters, the premium rates have gone up considerably. Most insurance companies have hiked their premiums by 30 to 50 percent. "It simply means that not only will you lose out on benefits but also will have to pay a much higher price for being insured," says Shreeraj Deshpande, head, Health Insurance, Bajaj Allianz General Insurance. The list of diseases that are excluded from the purview of the policy has also been extended. Under the current policy, benign ENT disorders and surgeries such as tonsillectomy, adenoidectomy, mastoidectomy and tympanoplasty come under first-year exclusions. In case an insured has missed his renewal, it will require him to re-do the medical tests. "This leaves no option other than renewing your policy. Otherwise, you'll start comparing the premium charged by various companies and decide accordingly," adds Gupta.
Apart from this, most medical insurance policies have a moratorium of about six months. This means that any claims made during the first six months of taking a fresh policy will not be reimbursed. So, if an insured loses out on renewing the old policy, he will have to start afresh.
An official from National Insurance believes that around 30 percent of health insurance policies lapse because people forget to renew their policies. "You can't blame the policy holders only. The insurance companies are partly responsible for that. We're supposed to send reminders a month in advance but sometimes because of negligence or system flaws it doesn't happen," he adds.
Most insurance companies, however, give a grace period of seven days, which can be extended to 15 days in case of extreme circumstances, under which a policy can be renewed for keeping it eligible for a no-claim bonus. "We don't want our customers to suffer, so we make sure that if the fault is on our side, then it should be rectified immediately. If the fault lies with the policy holder, then it can be reviewed on a case-to-case basis," says the official.