Customers who buy health insurance expect their premiums to accumulate and earn them a bonus while the policy protects and insures. Life insurance companies offer long term health saving plans that club health insurance with savings. Now general insurance companies are also enhancing options for consumers.
Health Savings Plans is one such investment and insurance option where you can save a part of the money you spend for health risk coverage. This means it promotes a savings account along with health coverage. Some life insurance companies in India offer long term health plans, and give lump sum cash payment at the time of a claim, irrespective of the actual expenses incurred during your hospital stay. HDFC Life Health Assure Plan, Reliance Easy Care Fixed Benefit Plan, Bharti AXA Life Loan Secure and LIC's Jeevan Arogya are the popular ones in this category.
AdvertisementWith ULIPs regaining lost popularity, life insurers have gone one step ahead by providing Unit Linked Health Care Plans or Money Back Health Insurance Plans, combining investments and health insurance. The popular plans in this category are ICICI Prudential's Health Saver, Birla Sunlife's Saral Health and LIC's Health Protection Plus.
General insurance companies, at present have traditional health care policies. Now with the passing of the Insurance Amendment Bill 2015, the health insurance segment can offer stand-alone products, with long-term plans. Cigna TTK is the first to announce a Health Savings Plan in the general insurance segment in India, though the specific contours of the product are yet to be revealed.
Unit Linked Health Plans - like mutual funds, ULHPs are managed investments, where you can allocate your invested amount in different funds according to the risk you are prepared to take. You can choose the amount of premium you wish to invest and benefit from the assured Sum Insured as per the plan's provisions. The premium payment period varies for different companies, ranging from 5-10 years and the coverage offered in most cases is life-long.
Health Savings Plans offer a mix of an investment account as well as a health cover. Here, a part of the premium is allocated towards a savings or investment account, while the rest is utilized towards offering a protective cover. While the exact percentage of allocation towards savings or investments and health insurance will vary from company to company, typically a health savings plan would allocate 30-40% of the premium for savings.
For example, let us say you need health coverage of only two lakhs as your employer also insures you. Now, if you opt for a health savings plan, 30-40% of the premium may go towards a saving account, and the rest would offer cover against medical expenses.
In both plans, the money invested in the savings account can be used to cover any related medical expenses that are not covered under a traditional medical policy, like doctor's consultation fees, post-hospitalization expenses, treatments or pre-existing conditions. The money accumulated in the savings account for the health savings plan is invested in bonds and equities to earn returns on investment.
As this is a new concept in general insurance, it is not yet decided on the extent of equity exposure versus investment in government bonds that health insurance companies would resort to.
Health savings plans cannot take the place of your investments or health care coverage but there are some deductibles in health insurance-exclusions due to pre-existing diseases, doctor's fees, etc. These can be covered through a health savings plan as you can use the money pooled.
In the Budget 2015-16, there has been an increase in the limit for tax deduction for investments in health insurance to Rs. 25,000. Now, as health insurance plans are poised to offer good returns while retaining the protective coverage element, the sector is likely to witness positive momentum in the coming months. The Health Savings Plans of general insurers are still in the discussion stage and have not been launched as yet.
Source: Adhil Shetty
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