New Health Insurance Project Swati Sarang (Tybbi)Um

CHAPTER 1 INSURANCE

Page 1

INTRODUCTION TO INSURANCE “Insurance is a protection from risk as the man is perennially exposed to risk”. Life may stop suddenly with a heart attack. The house may unexpectedly catch fire and be gutted the crop may be lost by vagaries of nature, draught, disease or flood. The motor Car may be badly damaged in a road accident, thus, risk of different kinds resulting in loss are Inevitable in life. Insurance provides an answer by providing protection to persons from such Contingencies. Insurance is coverage by contract where by one party (insurer) agree to indemnify or guarantee another (insured) against loss by a specified contingent event or peril and or an unfortunate event. The aim of all types or classes of insurance is to afford protection to the Insured from the risk, which he apprehends or anticipates. The protection from insurance is available to the insurer not in preventing the event happening but in indemnifying the insured from the loss he has sustained. Insurance is a major component of the financial sector. It is a risk transfer mechanism, whereby an insured transfers a risk exposure to an insurer in consideration for the payment of premium. Health care insurance or health insurance is a contract between a policyholder and a third-Party payer or government program to reimburse the policyholder for all or a portion of the cost of medically necessary treatment or preventive care provided by health care Professionals. The subject matter of insurance is PROPERTY, PREMIUM, and LIABILITY.

Page 2

1.2 Functions of Insurance The function of insurance is two folds. In the first instance it transfers or shifts a risk from one individual to a group and secondly, the losses are shared, on some equitable basis by all members of the group. Insurance is a device where- by the risk of financial loss accruing from death or disability, or damage to, or destruction of property owing to perils to which they are exposed is passed on to another. The insurer, of course, collects an agreed rate of contribution from a large number of people and relieves the insured partly, if not wholly, from the effects of loss by paying the insurance money. Contract of Insurance A contract of insurance is an agreement whereby one party called the Insurer Undertakes, in return for an agreed consideration, called the Premium, to pay the other party namely, the Insured a sum of money or its equivalent in kind, upon the occurrence of specified event resulting in loss to him. The Policy is a document, which is an evidence of the contract of insurance. The contract of insurance is governed by the law of contract as embodied in the Indian Contract Act, 1872. All insurance contracts must have the following five essential elements in order that they may be legally enforceable. Offer and acceptance: The person who wants to take up cover against particular perils offers his risk through a proposal form to the insurance company. Consideration: The premium paid is the consideration and on its receipt by the insurance company the contract of insurance comes into force.

Page 3

Consensus Ad Idem: The parties to the contract must be of the same mind and there should be a complete and unbiased agreement between the insurer and the insured regarding the terms of the contract. The intention of the insured should have been clearly understood by the insurance company. Capacity to Contract: Both the parties must be legally competent to enter into an agreement. The parties to the contract should not be of unsound mind. They must have attained the age of majority and should not have been declared as insolvent. Legality of the Object of the Contract: The purpose for which the agreement is entered into should be legal and not opposed to public policy.

Page 4

1.2 Basic Principles of Contract of Insurance Insurable Interest: A contract of insurance does not undertake to prevent the occurrences of the peril insured against. What it provides is a promise to make good the financial loss caused by the operation of the insured peril. Utmost good faith: Law requires both the parties to the contract to observe good faith, which means absence of fraud. Insurance contracts are subjected by law to a higher duty namely of utmost good faith. The proposer has a duty to disclose to the insurer all material facts which he knows and which he ought to known. A material fact is facts which affect the judgment of a prudent underwriter deciding whether to accept the risk and if so, at what rate of premium and subject to what terms and conditions. Indemnity: Indemnity means compensation for loss or injury. It also means security or protection against loss or damage. Insurance contracts promise to make good the loss or damage limiting it to the amount of loss or damage subject to the sum insured. Subrogation and Contribution: Subrogation is defined as the transfer of right and remedies of the insured to the insurer who has indemnified the insured in respect of the loss. Proximate Cause: The object of insurance is to provide indemnity not for any loss but only for such losses as are caused by insured perils. The perils insured are clearly stated in the policy and the liability of the insurer arises only if the loss is caused by these perils.

Page 5

1.3 Objective of the study

1. To know about the risk covered in health insurance. 2. To protect in the event of unexpected loss, but due to reasons associated with health care costs. 3. To make health insurance important for many people. 4. To ensure quality services to the customers. 5. To provide the superior selling skills to market quality products and services that provides best insurance value for consumers. 6. To provides direct payment or reimbursement for expenses associated with illness & injuries. 7. To protects you & your dependents against any financial constraints arising on account of a medical emergency. 8. To cover the ever rising medical expenses. It is affordable & carries the assurance & freedom from insecurities that threaten normally now & then. 9. To save you from buying a policy which might not be appropriate for you & can also be expensive.

Page 6

1.4 Types of Insurance in India

Insurance in India can be broadly categorized into two types: life and general. Life insurance can be further classified into term life insurance, whole life insurance, money back plan, endowment policy and pension plan. Health, home, accident, motor and travel insurances fall under the general insurance category. State-owned companies like Life Insurance Corporation of India, as well as private insurance providers, like ICICI Prudential and Bajaj Allianz, provide life and general insurances in India.

LIFE INSURANCE : Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the premium; however, in Australia the predominant form simply specifies a lump sum to be paid on the policy holder's death. Term Life Insurance Policy: As its name implies, term life insurance policy is for a specified period. It lets you select the length of time for which you want coverage, up to a period of 35 years. It has one of the lowest premiums among insurance plans and also carries an added advantage of fixed payments that do not increase during your term. In case of the policy holder's untimely demise, the benefit amount specified in the insurance agreement goes to the nominees.

Page 7

Whole Life Insurance Policy: Whole life insurance policies do not have any fixed term or end date and is only payable to the designated beneficiary after the death of the policy holder. The policy owner does not get any monetary benefits out of this policy. Because this type of insurance involves fixed known annual premiums, it's a good option if you want to ensure guaranteed financial benefits for surviving family members. Money Back Plan: With a money back plan, you receive periodic payments, which are a percentage of the entire amount insured, during the lifetime of your policy. It's a plan that offers insurance coverage along with savings. A unique feature of the money back plan is that in the event of the policy holder's death during the policy term, the beneficiary will get the full sum assured without having any of the survival benefit amounts, which have already been paid, deducted. Pension Plan: Pension plans are different from other types of life insurance because they do not provide any life insurance cover, but ensure a guaranteed income, either for life or for a certain period. You make the investment for a pension plan either with a single lump sum payment or through installments paid over a certain number of years. In return, you get a specific sum every year, every half-year or every month, either for life or for a fixed number of years. Endowment Policy: An endowment policy can be taken out for a specified period. At the end of the stipulated period, the assured amount is paid back to the policy holder, along with the bonus accumulated during the term of the policy. Designed primarily to provide a living benefit, along with life insurance

Page 8

protection, the endowment policy makes a good investment if you want coverage, as well as some extra money. GENERAL INSURANCE: Insurance other than „Life Insurance‟ falls under the category of General Insurance. General Insurance comprises of insurance of property against fire, burglary etc, personal insurance such as Accident and Health Insurance, and liability insurance which covers legal liabilities. There are also other covers such as Errors and Omissions insurance for professionals, credit insurance etc. Non-life insurance companies have products that cover property against Fire and allied perils, flood storm and inundation, earthquake and so on.The non-life companies also offer policies covering machinery against breakdown,there are policies that cover the hull of ships and so on. A Marine Cargo policy covers goods in transit including by sea, air and road. Further, insurance of motor vehicles against damages and theft forms a major chunk of non-life insurance business. Accident and health insurance policies are available for individuals as well as groups. A group could be a group of employees of an organization or holders of credit cards or deposit holders in a bank etc. Normally when a group is covered, insurers offer group discounts.

Health Insurance: Under the general insurance category, health insurance is one of the most popular choices. In India, Mediclaim covers hospitalization, expenses incurred during medical tests and for medicines. You can also get coverage for medical expenses by opting for the 'Critical Illness (CI)' rider available with life insurance policies. This means that in case of a 'critical illness' as defined by the insurance company during the policy tenure, you will be paid the amount as proposed in the policy.

Page 9

Vehicle insurance: Vehicle insurance

(also known as auto insurance, gap

insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise therefrom. The specific terms of vehicle insurance vary with legal regulations in each region.

Home insurance: Home insurance, also commonly called hazard insurance or homeowner's insurance (often abbreviated in the real estate industry as HOI), is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory. It requires that at least one of the named insureds occupies the home. The dwelling policy (DP) is similar, but used for residences which don't qualify for various reasons, such as vacancy/non-occupancy, seasonal/secondary residence, or age.

Page 10

CHAPTER 2 HEALTH INSURANCE

Page 11

HEALTH INSURANCE 2.1 Introduction: Human life is subject to various risks- risk of death or disability due to natural or accidental events. The term “health plan” is often used to provide health care insurance. People buy health insurance for different reasons and health insurance premiums seem to be higher but more attractive among higher income group especially the rich. In selecting health insurance, a person must understand the various risks associated with the different types of insurance available today. Not all insurance is equal. Each type of insurance has its own strengths and weaknesses. The wrong health insurance choice can place financial future in severe jeopardy. Most important criteria in selecting the health insurance should be minimum premium and maximum insurance coverage. Generally, the insurer adopts mini-max strategy. In this context, the authors have attempted to exhibit the various schemes and plan available for health insurance, and suggested the most appropriate health insurance for attainting sustainable living. Humans are also prone to diseases, the treatment of which may involve huge expenditure. Health insurance is one of the most controversial forms of insurance because of the perceived conflict between the need for the insurance company to remain solvent versus the need of its customers to remain healthy, which many view as a basic human right. Critics of private health insurance claim that this conflict of interest is why governmental regulations of health insurance companies are necessary.

Page 12

2.2 History of health insurance: Some people think of health insurance as a recent development in human history. But concern for financial loss resulting from accident and illness can be traced to ancient civilizations. Health insurance, limited primarily to disability income in case of accident existed in the early history of Rome. This tradition continued in Europe in the middle Ages, and by the 17th century there were laws providing sickness insurance for seamen and dismemberment insurance for soldiers. Health insurance today is a broad array of coverage providing for the payment of benefits as a result of sickness and injury. It includes insurance for losses from medical expense, accident, disability, and accidental death and dismemberment (AD&D). Features of Health Insurance: There are three basic types of health insurance policies. One is Straight Life Policy, which guarantees to cover the person against the odds throughout the life span up to 100 years. The next basic type of policy is Limited Pay Life policy but one can restrict the time for which one wishes to pay the premium. One can make the payments till sixty-five years of his age continuously for 10 years. Single Premium Life is the other basic type of health insurance in which an individual makes a lump sum premium. Many additional features are even offered by insurance companies, such as accidental coverage and many more alike. Function: Health insurance is coverage that is provided for medical care. Most medical costs incurred from a routine doctor's visit to a visit to the emergency room are the responsibility of the insurance carrier. Partial or full payment of the monthly premium is typically deducted from an employee's wages. The covered individual usually has some out-of-pocket expense, such as a co-payment or deductible.

Page 13

2.3 Importance of Health Insurance

People buy health insurance for different reasons. The following are some of the reasons:

Health insurance can protect you from the risk of uncertain bills for health care.



Without health insurance, you may not be able to afford expensive services.



Health insurance can pay for services that you use often.



Health insurance an help you to get better quality care as a member of a coordinated health plan than you would get on your own.



With health insurance, you do not have to worry about the cost of care when you are sick.



The additional money provided by health insurance when you are sick may be more valuable to you than money when you are well.



If you have more dependents than most people, then you may get more out of a family policy for health insurance.



If you or your dependents than most health care needs than most people and you only pay an average premium, then you get more from health insurance than most people.



You do not pay income tax on health insurance benefits so it is more valuable per dollar than the same amount in taxable pay; and



Health insurance companies generally pay lower prices to Doctors and hospitals than you would pay on your own.

Page 14

Why Health Insurance? Medical expenses are sky high these days. An appointment with a doctor might churn out big bucks. The elaborate medical treatment expenses could eat into your savings meant for the future. Health insurance policy kicks in to ensure that you get the required treatment and your pocket is still under control. Having health insurance is important because the coverage helps people get timely medical care and improve lives and health. It covers the risk of financial difficulties in the event of long illness. The awareness has been enormous in the last couple of years. This must have been in response to the series of uncertainties people have observed in recent times like the terror attacks. BENEFITS: 

Benefit depends on the policy you choose and the coverage it provides. Here is a list of basic coverage provided by most of the health policies.



It helps securing a better future by paying a fraction as an expense today called the premium.



It reduces saving huge amount of financial losses, risk of financial breakdown in case of expensive medical and post-illness care.



It definitely induces a sense of security to the insured.



It provides financial security to the family members.



It covers your hospitalization and medical bills.



It also covers disability and custodial bills.



You can avail tax benefits on the premium paid under section 80D of the Income Tax Act.



The best factor, you can also opt for health insurance policies even after the age of 60.

Page 15

2.5 Advantages of Health Insurance: 

Buying a health insurance policy can prove to be beneficial and one can make most of it by taking cover against the odds and uncertainties of life. It is advisable to buy the health insurance policy from some credible insurance company as they facilitate in the better treatment of the person. It facilitates an individual to be treated well in time and private rooms and timely services are offered.



As life is more precious than anything therefore one must not compromise on the cost of the health insurance policy. With the increasing competition, companies are now coming up with more comprehensive and cost effective policies so as to cater to the personalized needs of the customer.



There are many advantages, which an individual can bag in many of them. Some of the benefits, which come with the health insurance, are childbirth and well baby, critical illness and consultation fees coverage. Disadvantages of Health Insurance:



There are few limitations of these health insurance policies. The health insurance company has the right to accept or deny the application. If the health insurance company feels that an individual is susceptible to more ailments then the health insurance company will refuse to provide the cover.



The premium to be paid is never fixed; it can be changed by the company depending on the change in the health insurance policy of the government. Health insurance companies at times fail to honor the deed and this leaves the insured in a fix. At times people do not give their true medical history and this compels insurance companies to contravene the deed.

Page 16

2.6 What is TPA (Third Party Administrators)? TPA stands for Third Party Administrator. TPA is a middleman between Insurer and the Customer. Customer can directly deal with TPA at the time of claim and TPA will help with all the process of claim settlement. A TPA is a specialized health service provider rendering variety of services like networking with hospitals, arranging for hospitalization and claim processing and settlement. The concept of TPA has been introduced by the IRDA (Insurance Regulatory and Development Authority of India) for the benefit of both the insured and the insurer. While the insured is benefited by quicker & better health service, insurers are benefited by reduction in their administrative costs, fraudulent claims and ultimately bringing down the claim ratios. An insurance company can have more than one TPA and a TPA can serve more than one insurance company. Some of the services TPA provides are 

Maintain database of policyholders



Issue of identity card to all policyholders=



Provide ambulance service



Provide information to policyholders about hospitals.



Check various investigations



Provide Cashless service



Process claims.

Third Party Administrators and their Role: Third Party Admistrator (TPA) was introduced through the notification on TPA-Health Services Regulations, 2001 by the IRDA. Their basic role is to function as an intermediary between the insurer and the insured and facilitate the cash-less service of insurance. For this service they are paid a fixed per cent of insurance premium as commission.

This

commission is currently fixed at 5.6 per cent of premium amount.

Page 17

CHAPTER 3 HEALTH INSURANCE IN INDIA

Page 18

HEALTH INSURANCE IN INDIA Health insurance can be defined in very narrow sense where individual or group purchases in advance health coverage by paying a fee called "premium". But it can be also defined broadly by including all financing arrangements where consumer s can avoid or reduce their expenditures at time of use of services. The health insurance existing in India covers a very wide spectrum of arrangements and hence the latter - broader interpretation of health Insurance is more appropriate. Health insurance is very well established in many countries. But in India it is a new concept except for the organized sector employees. In India only about 2 per cent of total health expenditure is funded by public/social health insurance while 18 per cent is funded by government budget. I n many other low and middle income countries contribution of social health insurance is much higher. Percentage of total health expenditure funded through public/social insurance and direct government revenue

Country

Social Health

Government Budget Insurance

Algeria

37

36

Bolivia

20

33

China

31

13

Korea

23

10

Vietnam

2

20

India

2

18

It is estimated that the Indian health care industry is now worth of Rs. 96,000 crore and expected to surge by 10,000 crore annually. The share of insurance market in above figure is insignificant. Out of one Page 19

billion population of India 315 million people are estimated to be insurable and have capacity to spend Rs. 1000 as premium per annum. Many global insurance companies have plans to get into insurance business in India. Market research, detailed planning and effective insurance marketing is likely to assume significant importance. Given the health financing and demand scenario, health insurance has a wider scope in present day situations in India. However, it requires careful and significant effort total Indian health insurance market with proper understanding and training.

The graph shows sharp rise in the penetration of the Health Insurance in India after1999. This was due to the policy change by IRDA (Insurance regulatory and development Authority) and private players were allowed to enter the health insurance segment.

Page 20

3.1 Sources of health insurance in India 3.1.1. Mediclaim policy (individual) The

policy

Hospitalization/Domiciliary

provides

hospitalization

for expenses

reimbursement for

of

illness/disease

suffered or accidental injury sustained during the policy period.  The policy pays for expenses incurred under the following heads:  Room, boarding expenses in the Hospital/Nursing home.  Nursing expenses.  Surgeon, Anaesthetist, Medical Practitioner, Consultants, Specialist fees.  Anaesthesia, Blood, Oxygen, Operation theatre charges, Surgical Appliances, Medicines and Drugs, Diagnostic Materials, and X-ray, Dialysis, Chemotherapy, Radiotherapy, Cost of pacemaker, Artificial Limbs and Cost of organs and similar expenses. 

The liability in respect of all claims admitted during the period of insurance shall not exceed the sum insured for the person as mentioned in the schedule.



Reimbursement is allowed only when treatment is taken in a hospital or nursing home which satisfies the criteria specified in the policy.



Expenses on hospitalization for minimum period of 24 hours are admissible. However, this time limit is not applied to specific treatment i.e. Dialysis, Chemotherapy, Radiotherapy, Eye Surgery, Dental Surgery, Lithotripsy(Kidney stone removal), D&C, Tonsillectomy taken in the hospital/ nursing home and the insured is discharged on the same day; the treatment will be considered to be taken under hospitalization benefit.



Relevant medical expenses incurred during period up to 30 days prior to and period of 60 days after hospitalization are treatment as part of the claim. Page 21

Domiciliary hospitalization benefit This means medical treatment for a period exceeding 3 days for such illness/ injury which in the normal course would require treatment at the hospital/ nursing home but actually taken whilst confined at home in India under any of the following circumstances namely: The condition of the patient is such that he / she cannot be removed to the hospital/ nursing home or The patient cannot be removed to hospital / nursing home for lack of accommodation therein. However this benefit does not cover: 1. Expenses incurred for pre and post hospital treatment and 2. Expenses incurred for treatment for any of the following diseases: Asthma, Bronchitis, Chronic nephritis, Diarrhea and all type of dysenteries including Gastroenteritis, Diabetes mellitus and insipidus, Epilepsy, Hypertension, Influenza, cough and cold, All psychiatric or psychosomatic disorders, Pyrexia of, unknown origin for less than 10 days, Tonsillitis and upper respiratory tract infection including laryngitis and pharyngitis Arthritis, gout and rheumatism. Under the policy any one illness means continuous period of illness and it includes relapse within 45 days from the day of last consultation with the Hospital / Nursing home where treatment may have been taken. Occurrence of same illness after a lapse of 45 days will be considered as fresh illness for the purpose of this policy.

Page 22

No claim is payable in respect of the following: 

All diseases/ injuries which are pre- existing when the cover incepts for the 1st time.



Cost of spectacles and contact lenses, hearing aids. (these may be termed as normal maintenance expenses).



Dental treatment or surgery of any kind unless requiring hospitalization.



Various conditions commonly referred to as AIDS.



Expenses on vitamins and tonics unless forming part of treatment.



Treatment arising from childbirth including Caesarean section (can be deleted, if maternity benefit is covered).



Voluntary medical termination of pregnancy during the first 12 weeks from the date of conception.



Naturopathy treatment.



Any disease other than those stated in clause(c ) below, contracted by the insured person during the first 30 days from the commencement date of the policy. This exclusion shall not however, apply if in the opinion of Panel of Medical Practitioners constituted by the company for the purpose, the insured person could not have known of the existence of the disease or any symptoms or complaints thereof at the time of making the proposal for insurance to the company.



This condition shall not however apply in case of the insured person having been covered under this scheme or group insurance scheme with any of the Indian insurance companies for a continuous period of preceding 12 months without any break.



During the first year of the operation of the policy the expenses on treatment of diseases such as Cataract, Benign Prostatic Hypertrophy, Hernia, Hydrocele, Piles, Sinusitis and related disorders. If these diseases are per- existing at the time of proposal they will not be covered even during subsequent period of renewal.

Page 23

Age limit: 

This insurance is available to persons between age of 5 years- 80 years children between the age of 3 moths and 5 years of age can be covered provided 1 or both parents are covered concurrently.



Family discount



This discount of 10% in the total premium is allowed to a family comprising the insured and any 1 or more of the following



spouse



dependent children (i.e. legitimate or legally adopted )



dependent parents

Cumulative Bonus: The sum insured is increased by 5% for each claim free year of insurance subject to a maximum accumulation of 10 years. In the event of a claim, the increased percentage will be reduced by 10% of the sum insured at the next renewal but the basic sum insured will remain the same. Cost of Heath Checkup: The insured shall be entitled to reimbursement of medical check up once in every 4 underwriting years subject to no claim preferred during this period. The cost shall not exceed 1% of the average sum insured during the block of 4 years. (Note: Both the above benefits apply in respect of continuous insurance without break. In exceptional circumstances maximum 7 days break is allowed subject to medical examination.) Extension of cover: The cover can be extended to Nepal and Bhutan with prior permission.

Page 24

Conditions: The more important conditions provide for the following: 

preliminary notice of claim with particulars relating to policy number, Name of insured person in respect of whom claim is made, Nature of illness/ injury and Name and address of the attending medical practitioner/ hospital/ nursing home should be given by the insured person to the company within 7 days from the date of hospitalization, domiciliary hospitalization.



Final claim with original receipted bills, cash memos, claim form and list of documents as listed in the claim form etc. should be submitted to the company within 30 days from the date of completion of treatment. (Note: in extreme cases of hardship to the insured, these limits may be waived.)

Sum insured and premium: 

The sum insured is available from Rs.15000/- with multiples of Rs.5000/- upto a maximum of Rs.500000/-.



Domiciliary hospitalization limit is fixed at 20% of the total sum insured upto Rs.1 lac and 15% beyond Rs.1 lac. The domiciliary hospitalization is a part of the overall limit of sum insured.



The premium is related the age of the person and to the sum insured selected by the insured.



Premium upto Rs.10000/- qualifies for tax benefit under section 80D of Income tax act.

Proposal form: 

The proposal form incorporates a prospectus which gives details of the cover, such as coverage, exclusions, provisions etc.The proposer has to sign it as having noted its contents.



The special features of the declaration to be signed by the proposer are as follows.

Page 25



The insured person consents and authorizes the insurer to seek medical information from any hospital/ medical practitioner who has at any time attended or may attend concerning any illness which affects his physical or mental health.



The insured person confirms that he has read the prospectus forming part of the form and is willing to accept the terms and conditions.



The declaration includes the usual warranty regarding the truth of the statement and the proposal form as the basis of the contact.

Page 26

3.1.2. Group Mediclaim policy: The

group

mediclaim

is

available

to

any

Group/

Association/ Institution/ Corporate body of more provided it has a central administration point and subject to a minimum number of persons to be covered. The group should fall clearly under the same categories as specified for group P.A.policy. The group policy is issued in the name of the group/ association/institution/corporate body (called insured) with a schedule of names of the members including his/her eligible family members (called insured persons) forming part of the policy. The coverage under the policy is the same as under individual mediclaim policy with the following differences:

Cumulative bonus and health check up expense are not payable.



Group discount in the premium is available.



Renewal premium is subject to bonus/malus clause.



Maternity benefit extension is available at extra premium.

Group discount: The group discount is allowed according to scale depending upon the total number of insured persons covered under the group policy at the inception of the policy as in group P.A.policy.

Bonus/malus: Low claim ratio discount (bonus) Low claim ratio discount is allowed on the total premium at renewal only depending upon the incurred claims ratio for the entire group. Page 27

(Incurred claims means claims paid plus claims outstanding at the end less outstanding at the beginning of the period in respect of the group insured under the policy during the relevant period) The discount ranges from 5 %( claims ratio not exceeding 60%) to 40 %( claim ratio not exceeding 25%). High claim ratio loading (malus): On the same basis of incurred claims ratio, loading is applied to the renewal premium for adverse claims experience. The loading ranges from 25% (ratio between 80% and 100%) to 150% (ratio176%to 200%). If the ratio is over 200% cover is reviewed. Maternity expenses benefit extension: This is an optional cover which is available on payment of 10% of the total basic premium for all the insured persons under the policy. Total basic premium means the total premium computed before applying group discount and/or high claim ratio loading. Low claim discount and special discount in lieu of agency commission. Option for maternity benefits has to be exercised at the inception of the policy period and no refund is allowable in case of insured‟s cancellation of this option during currency of the policy. The maximum benefit allowable is upto Rs.50000/- or the sum insured opted by the member of the group, whichever is lower. The special conditions applicable to this extension are: 

These benefits are admissible only if the expenses are incurred in hospital/nursing home as in patients in India.



A waiting period of 9 months is applicable for payment of any claim relating to normal delivery or caesarean section or abdominal operation for extra uterine pregnancy. The waiting period may be relaxed only in case of delivery, miscarriage, or abortion induced by accident or other medical emergency. Page 28



Claim in respect of delivery for only first two children will be considered in respect of any 1 insured person. Those insured persons who already have 2 or more living children will not be eligible for this benefit.



Expenses incurred in connection with voluntary medical termination of pregnancy during the first 12 weeks from the date of conception are not covered.



Pre-natal and post-natal expenses are not covered unless admitted in hospital/nursing home and treatment is taken there.

Details of insured person: 

The insured is required to furnish a complete list of insured persons in the prescribed format according to sum insured.



Any additions and deletions during the currency of the policy should be intimated to the company in the same format. However such additions and deletions will be incorporated in the policy from the first day of the following month subject to pro-rata premium adjustment.



No change of sum insured for any insured person will be permitted during the currency of the policy.



No refund of premium is allowed for deletion of insured person if he or she has recovered a claim under the policy.

Page 29

3.1.3. Family Floater policy For instance a person wants a health insurance for himself, his spouse & their children; the Family Floater plan offers insurance coverage to the entire family under one premium payment. Let‟s take an example wherein the person insures himself, his spouse & the dependent children with the individual insurance plans with a sum assured of Rs. 1 lakhs each, he ends up paying premium ranging between Rs. 1000 - Rs. 2000 for each family member. On the other hand if the person would have opted for the family floater plan with the sum assured of Rs. 3 lakhs, the total premium would surely be less than the separate premium payments in individual health insurance plans. Moreover the separate health plan holds the cover of only Rs. 1 lakh as against Rs. 3 lakh in case of the Floater plan thus helping the family in case the medical treatment costs go beyond that. What are the benefits of a Floater Plan? 

A single policy takes care of your entire family



Single premium for the entire family.



The sum insured floats over the entire family.



One single policy covers the details of entire family.

Page 30

3.1.4. Unit Linked Health Plans: Taking the route, health insurance companies too have introduced Unit Linked Health Plans. Such plans combine health insurance with investment and pay back an amount at the end of the insurance term. The returns of course are dependent on market performance. These plans are very new and still in development phase. This is only recommended for people who can handle market linked products like ULIP and ULPP. What are ULIPS? ULIPS are investment cum insurance products, you take insurance worth XYZ amount and then you pay some premium every year. Out of your premiums some amount is cut as administrative expenses (Premium allocation) and out of rest the mortality charges are cut for your insurance and the rest is invested in market linked things. Some points to note here are: 

You decide the tenure of your Insurance and the insurance amount, depending on which mortality charges are cut from your premium you pay.



The Premium allocation charges are very high in initial years (especially 1st year) and then reduce in later years. That‟s the reason one should be invested in ULIP for long period to get maximum benefit.



The money actually invested is invested as per your directions … ULIPS have different plans with different risk-return profile. One plan may have allocation of 80-20 to equity and debt, some other can have 50-50 and some can have 20-80 and like this.



The investor can switch between the investment styles as and when he wants (max 4 free switches in most of the cases, there after some nominal fees).



ULIPS have sec 80C benefit; minimum of 3 premiums has to be paid.



ULIPS must be considered for long term investment products, so that the high cost in initial years are averaged out over longer period. Page 31

Advantages: 

The switching over different styles is not costly, you are not charged when you switch, which make them flexible.



ULIPS are innovative products and suits people who want long term wealth creation with some insurance too.

Disadvantages: 

They are not good product for people who require high cover and can pay less cover, because premium depends on the cover. Higher the cover, higher the premium. So these people must take term insurance for their life insurance.



For people investing only for tax benefit must avoid them as they will prove to be costly in short term because of there high allocation charges.

Page 32

3.1.5. Jan Arogya Bima Policy 

The coverage under the policy is along the lines of the individual mediclaim policy except that cumulative bonus and medical check up benefits are not included.



The policy is available to individuals and family members. The age limit is 5 to 70 years. Children between the age 3 months and 5 years can be covered provided one or both parents are covered concurrently.

The sum insured per insured person is restricted to Rs.5000/- and the premium payable as per the following table. Age of the person insured

Upto 46 years

46-55

56-65

66-70

Head of the family

70

100

120

140

Spouse

70

100

120

140

Dependent child upto 25 years

50

50

50

50

For family of 2+1 dependent

190

250

290

330

children

Premium upto Rs.10000/- qualifies for tax benefit under section 80D of the income tax act. Service tax is not applicable to the policy.

Page 33

3.1.6. Cancer insurance There are 2 cancer insurance schemes: o

Indian cancer society

o

Cancer patients aid association (CPAA)

Cancer policy (Indian cancer society): The insurance scheme came into effect from July, 1985 and is modified from 1st may, 1987 and is available to members of Indian cancer society. A proposal form and a membership form will have to completed by each proposer/member.The policy will come into operation only after a period of 1 month from the date of enrollment of the member, which date is also the date of commencement of the insurance. The policy is valid for 12 months and each insured member has to pay the annual subscription of the society before its expiry. However, the renewal insurance will have no waiting period. The policy covers the insured member and his/her spouse. During the operation of this insurance, if the insured member or spouse contracts cancer then the company will pay to the insured, the cost of diagnosis, biopsy, surgery, chemotherapy, radiotherapy, hospitalization and rehabilitation to the extent of Rs. 500000/-. For each claim free renewal (without break) 5% cumulative bonus would be allowed, subject to maximum of 50%. Reimbursement of claims is made (on quarterly basis) on production of medical/hospital bills until the entire sum of Rs. 50000/- (and cumulative member or his spouse is declared cured, whichever is earlier. The cancer policy can be extended to cover 2 dependent children on payment of Rs. 50% per child. The indemnity limit is Rs. 50000/- per child with cumulative bonus applicable to each child. Claim by one insured child does not affect liability under the policy in respect of the other child. The policy will Page 34

not cease to be effective if there is a claim by one of the children. The policy covers only allopathic mode of treatment. It is possible to grant a policy on group basis. The employer has to arrange for a well-wisher corporate membership. A group discount would apply on membership fee as well as premium amount. Cancer policy (CPAA): This policy is granted to members of the cancer patients aid association (CPAA). The insured by virtue of being a member of the CPAA has to submit a proposal from with a declaration that he is in good health and is not suffering from cancer. He has to undergo a medical checkup and a certification to that effect has to be made by CPAA of the proposal form. The proposal form and the certification form part of the contract of insurance. The premium shall be paid by the insured to CPAA as part of the membership fee and this also applies as a condition precedent to the renewal of the policy. (NOTE: group policies are also available with discount in the premium as in the case of group mediclaim policies) Coverage: If the insured during the currency of the policy suffers from cancer, the policy will pay to the insured medical/ surgical/ hospitalization/ diagnostic expenses actually and necessarily incurred but not exceeding the sum insured. Only allopathic mode of treatment is covered. The sum insured is increased by 5% in respect of each completed year during which the policy shall have been in force prior to the claim but the maximum increase is restricted to 50% of the sum insured. This cumulative bonus is lost if the policy is not renewed which 30 days after its expiry. Exclusions 

No claim is payable



If the insured contracts cancer within a period of 30 days from the date of becoming a member of the CPAA Page 35



Unless the diagnostic investigation reveals positive presence of cancer.



By reason of the contact of the insured with radiation or radioactivity from any source other than diagnostic or therapeutic source.



If the insured ceases to be a member of the CPAA.

Claim procedure: 

Notice of claim shall be served upon the insurers within 30 days of the happening of any event which gives rise to a claim.



The claim shall be substantiated with supporting documents within a reasonable period, duly certified by the CPAA.



Claim for reimbursement of medical expense may be submitted on quarterly basis.



Differences as to the claim or quantum thereof are to be referred to the committee set up by CPAA and new India.



If the company disclaims liability or there is dispute as to the quantum payable and if such questions are not referred to the committee within 3 months thereafter the claim is deemed to have abandoned.

Page 36

3.1.7. Bhavishya Arogya policy This is a deferred mediclaim policy and may be taken at any age from 25 years onwards up to 55years. The retirement age to be selected by the insured at the time of taking the policy may be between 55 and 60 years. The amount of maximum total benefit available under the basic policy will be Rs.50000/- during the lifetime of the insured commencing from, the policy retirement age and shall not exceed Rs.20000/- per any one illness or injury. The coverage under the policy is, more or less, the same as under mediclaim policy with the following differences: 

Pre and post hospitalization are not covered under the policy.



The following exclusions of the mediclaim policy do not appear in the policy:  30 days waiting period  1st year exclusions  Pre-existing diseases  Circumcision, pregnancy etc. Policy retirement age means the age selected by the

insured at the time of signing the proposal and specified in the schedule for the purpose of commencement of benefit in the policy. The policy retirement age cannot be advanced due to any cause during the pre-retirement period. Pre-retirement period means the period commencing from the date of acceptance of the proposal and ending with the policy retirement age specified in the schedule during which the insured shall be paying installment/single premium deposit as applicable. The scheme provides for payment of insurance premium in easy annual installment commencing from any selected date between 25 years and 55 years and ending with the attainment of selected age of retirement i.e. between 55years and 60 years. The scheme allows a suitable refund of premium already paid in the event of premature death of the insured as per prescribed scale. In case of voluntary withdrawals from scheme refund is allowed to the extent of 75% of the refund payable on death. After commencement of risk at policy retirement age there is, provision for refund at appropriate scale, in case of death provided no Page 37

claim is preferred. Similarly in case of voluntary withdrawals from the scheme refund is allowed to extent of 75% of refund payable on death, provided no claim is prefer Special / Extra benefits: The insured can increase the amount of benefit anytime prior to 4years of retirement age specified in the policy by additional units of Rs.10000/-each. Premium payable for such unit shall be at the rates of 20% of the basic premium applicable for the relevant age at which such additional units opted for. 

No pre insurance medical examination is required



Advancement / postponement of retirement age is not permissible



The scheme provides for assignment



Premium upto Rs.10000/- per year will be eligible for exemption under income tax act 80D.

Page 38

3.1.8. STAR TRUE VALUE HEALTH INSURANCE POLICY -

Royal Sundaram General Insurance Company Limited Star True Value Health Insurance is designed to offer health insurance to the masses. It is one of the cheapest health insurance available in the market. The premiums are very economical, making it within the reach of many. Star True Value is available in various options ranging from a minimum sum assured of Rs. 30,000 to a maximum of Rs. 80,000. However, the premium would depend on the age of the person proposed for the insurance. True Value Benefits: Hospitalization Cover: This would cover the insured person for in-patient hospitalization expenses provided the insured person is hospitalized for a minimum of 24 hours. These expenses include room rent and boarding expenses up to a maximum of 2% of the sum insured per day 

Nursing expenses



Surgeon's fees, Consultant's fees, Anesthetist fees.



Cost of blood, oxygen, operation theatre charges, diagnostic expenses, cost of pace makers.



Cost of medicines and drugs.



However, for Cataract surgery the cover is limited to Rs.20,000/-

Special Feature: 

Cumulative Bonus ranging from 5% for every claim free year of insurance up to 10 claim free years of continuous insurance.



Can members of a family be covered under a single policy?



Yes. Family would mean the proposer, spouse & dependent children up to 25 years of age and dependent parents.

Page 39



A discount of 10% on the premium is available if 2 persons are covered and 15% discount on the premium is available if more than 2 persons are covered. Premium Table

Sum Insured (in 5 ms –

26 yrs –

36 yrs - 46 yrs –

Rs)

25 yrs

35 yrs

45 yrs

55 yrs

30000

340

375

475

0

40000

400

450

525

0

60000

550

620

700

1275

70000

600

710

900

1515

80000

660

850

1005

1800

Premium in INR (Excluding Service Tax) Group policy is not admissible under this plan. Group policy is not admissible under this plan.

Claim Procedure: 

Call the Star Health 24 hour help-line to register the details of hospitalization.



Kindly mention your Star Health ID number for easy access to your policy details.



In case of a planned hospitalization, please register 24 hours prior to admission to the hospital



In case of emergency hospitalization, please register within 24 hours of hospitalization



In all network hospitals, the cashless facility on payments can be availed Page 40



For treatment in non-network hospitals, payments must be made upfront to the hospital. Reimbursement of the expenses will be effected by Star Health, on submission of the necessary documents.

Exclusions: 

All expenses incurred in connection with treatment of any illness/ disease/ condition, which is pre-existing at the time of commencement of insurance.



Treatment of illness/ disease/ sickness contracted by the Insured Person during the first 30 days from the commencement of the policy.



Expenses incurred in the first two years of continuous operation of insurance

cover

on

treatment

-

Cataract,

Hysterectomy,

for

Menorrhagia or Fibromioma, Knee replacement surgery (other than caused by an accident), Joint replacement surgery (other than caused by an accident),Prolapsed Inter-vertebral Disc (other than caused by an accident),Varicose veins / ulcers. 

Expenses incurred during the first year of operation of the insurance on treatment of diseases such as Benign prostate, Hypertrophy, Hernia, Hydrocele, Fistula in anus, Piles, Sinusitis and related disorders, Gall Stone / Renal Stone removal.



Naturopathy treatment



Expenses, which are purely diagnostic in nature with no positive existence of any disease.



Expenses incurred for treatment of disease/illness/accidental injuries by systems of medicines other than allopathic.



Expenses

incurred

for

treatment

of

congenital

diseases/defect/anomalies.

Page 41

Eligibility: 

Any person aged between 5 months and 55 (age at entry) years can take this insurance.

Benefits of availing this policy: 

24 hour Help-line.



Health Tips through Company's web enabled services.



Free General Physician advice.



Cashless facility if the treatment is availed at any of the Network Hospitals.

Advantages: 

Cashless hospitalization facility at over more than 4000 network hospitals across India.



Attractive family discount on premium amount ranging from 10% to 15%.



Cumulative bonus ranging from 5% to 25% for every claim free year renewal.



Tax benefit on premium paid (cheque or credit) under section 80C of the Income Tax Act, 1961.

Page 42

3.1.9. Travel insurance policy The Easy Travel Insurance Plan from Apollo Munich Health is a short-term travel insurance plan that aims to make your and your family‟s travel safe and hassle free. It guards you against illnesses, thefts and other unexpected occurrences that can impact your plans while you travel. It covers you and your family members (including spouse, dependent parents and children) and offers you benefits, such as emergency cash, family transportation, transport of imported medicines, doctor referrals, etc. In addition to this, you have access to latest travel and health-related information. This policy is available in four variants which are tailormade to cover a wide range of travel emergencies. So now you have freedom to pick what suits you the best and enjoy comprehensive travelrelated benefits. You can access the following services: 

Medical advice on telephone 24x7, while travelling



Referrals of medical service providers and hospitals



Reimbursement of medical expenses incurred during hospitalization where ever possible



Lost of luggage assistance



Lost passport assistance



Embassy and interpreter referral services and much more



No medical tests required upto 70 years of age and much more for a trip of duration not more than 180 days.

Page 43

3.2 DIFFERENT TYPES OF SCHEMES IN INDIA : 3.2.1 Employee State Insurance (ESI) Scheme: Under the ES I Act, 1948 ES I Scheme provides protection to employees against loss of wages due to inability to work due to sickness, maternity, disability and death due to employment injury. It also provides medical care to employees and their family members without fee for service. When implemented for the first time in India at two centers namely Delhi and Kanpur simultaneously in February 1952, it covered about 1.2 lakh employees. Presently the scheme is spread over 22 states and Union territories across India covering 91lakh employees and more than 350 lakh beneficiaries. The Act compulsorily covers: 

All power using non- seasonal factories employing 10 or more per sons;



All non-power using factories employing 20 or more employees and



Service establishments like shops, hotels restaurants, cinema, and road transport and news paper s are covered. ESIC is a corporate semi- government body headed by Union Minister of Labor as Chairman and the Director General as chief executive.



Its members are representatives of central and state governments, employers, employees, medical profession and parliament. The financing of the scheme is done by Employees State Insurance Corporation (ESIC)

This is made up of contributions from: 

Employees who contribute at the rate 1.75 percent of their wages (if daily wage is Rs.25 or less, his contribution is waived);



Employers who contribute at the rate of 4. 75 per cent of total wage bills of their employees to contribution on behalf and for employees having daily wage Of Rs. 25 or less; and Page 44



State Governments contribute 12.5 per cent of total shareable expenditure worked out by prescribed ceiling on expenditure which is Rs. 600 per insured The State Government runs the medical services of

this scheme of social insurance meant for employees covered under the ESI Act 1948. This scheme - compulsory and contributory in nature - provide uniform package of medical and cash benefits to insured persons is implemented through special ESI hospitals and diagnostic centers, dispensaries and panel doctors. The deliver y of medical care is through service (direct) s stemmed and/or panel (indirect) system. It provides allopathic medical care, but medical care by other systems like ayurvedic and homeopathy in the states is also provided as per the state government decision. The medical care consists of preventive, promotive, curative and rehabilitative types of services are provided by the scheme through its own network or through arrangements with reputed government or private institutions by concept of proper referral system and regionalization. Health Insurance for the aged: Till a few years back, health insurance companies were reluctant to provide cover for the aged. But nowadays there are a lot of insurance companies providing policies for the senior citizens. Insurance cover paid for a person of age 65 years and above, can provide additional tax exemption of up to Rs.20,000. But keep in mind that the premium rates are higher for senior citizens. For the employed, another option is to approach the employer to negotiate with the official insurer to provide an option for additional cover to parents. Since the volumes are high, the insurer can provide such added cover at attractive premium rates.

Page 45

Existing infrastructure under ESIS in India Particulars No. of Centers

Units 632

No. of Insured Persons/Family Units ESI Hospitals

84,45,000 125

Number of ESI Hospital Beds

23,334

ESI Dispensaries

1,443

Insurance Medical Officers

6,220

Insurance Medical Practitioners

2,900

Employment and study policy: The policy is designed for Indian citizens temporarily posted abroad in a sedentary non-manual work or students prosecuting studies or engaging in research activities abroad. The salient features of the scheme are: 

Age limit : 18to 60 years



Limit of liability: U.S. $ 75000/-any one insured person and in all any one period of insurance.



Deductible

Page 46

3.2.2 Central Government Health Scheme (CGHS): Since 1954, all employees of the Central Government (present

and

retired);

some

autonomous

and

semi-

government

organizations, MPs, judges, freedom fighters and journalists are covered under the Central Government Health Scheme (CGHS). This scheme was designed

to

replace

the

cumbersome

and

expensive

system

of

reimbursements (GOI, 1994). It aims at providing comprehensive medical care to the Central Government employees and the benefits offered include all outpatient facilities, and preventive and promotive care in dispensaries. Inpatient facilities in government hospitals and approved private hospitals are also covered. This scheme is mainly funded through Central Government funds, with premiums ranging from Rs 15 to Rs 150 per month based on salary scales. The coverage of this scheme has grown substantially with provision for the non-allopathic systems of medicine as well as for allopathic. Beneficiaries at this moment are around 432 000, spread across 22 cities. The CGHS has been criticized from the point of view of quality and accessibility. Subscribers have complained of high out-of- pocket expenses due to slow reimbursement and incomplete coverage for private health care (as only 80% of cost is reimbursed if referral is made to private facility when such facilities are not available with the CGHS).

NGOS / Community-Based Health Insurance Community- based funds refer to schemes where members prepay a set amount each year for specified services. The premium are usually flat rate (not income-related) and therefore not progressive. Making profit is not the purpose of these funds, but rather improving access to services. Often there is a problem with adverse selection because of a large number of high-risk members, since premiums are not based on assessment of individual risk status. Exemptions may be adopted as a means of assisting the poor, but this will also have adverse effect on the ability of the insurance fund to meet the cost of benefits.

Page 47

Community- based schemes are typically targeted at poorer populations living in communities, in which they are involved in defining contribution level and collecting mechanisms, defining the content of the benefit package, and / or allocating the schemes, financial resources (Such schemes are generally run by trust hospitals or non-governmental organizations (NGOs). The benefits offered are mainly in terms of preventive care, though ambulatory and in- patient care is also covered. Such schemes tend to be financed through patient collection, government grants and donations. Increasingly in India, CBHI schemes are negotiating with the for profit insurers for the purchase of custom designed group insurance policies. However, the coverage of such schemes is low, covering about 30-50 million indicates that many community- based insurance schemes suffer from poor design and management, fail to include the poorest- of-the poor, have low members hip and require extensive financial support. Community based health insurance (CBHI) schemes offered by Self-Employed Women's Association (SEWA), Gujarat, Tribhuvandas Foundation (TF), Anand, or The Mallur Milk Cooperative in Karnataka come under non-progressive funds with flat rate premia. The schemes are launched to improve the access of health services, rather than making profit.

Health Insurance Initiatives by State Governments: In the recent past, various state governments have begun health insurance initiatives. For instance, the Andhra Pradesh government is implementing the Aarogya Raksha Scheme since 2000, with a view to increase the utilization of permanent methods of family planning by covering the health risks of the acceptors. All people living below the poverty line and those who accept permanent methods of family planning are eligible to be covered under this scheme. The benefits to be availed of, include hospitalization costs up to Rs. 4000 per year for the acceptor and for his / her two children for a total period of five years from date of the family planning

Page 48

operation. The coverage is for common illnesses and accident insurance benefits are also offered. This scheme can be availed by all permanent residents of Goa with an income below Rs 50 000 per annum for hospitalization care, which is not available within the government system. The non-availability of services requires certification from the hospital Dean or Director Health Services. The overall limit is Rs 30000 for the insured person for a period of one year. The aim of the project was to develop and test a model of community health financing suited for rural community, thereby increasing the access to medical care of the poor. The beneficiaries include the entire population of these blocks. The premium is Rs 30 per person per year, with the Government of Karnataka subsidizing the premium of those below poverty line and those belonging to Scheduled Castes/ Scheduled Tribes. This premium entitles them to hospitalization coverage in the government hospitals up to a maximum of Rs 2500 per year, including hospitalization for common illnesses, ambulance charges, loss of wages at Rs. 50 per day as well as drug expenses at Rs 50 per day. Reimbursements are made to an insurance fund which has been set up by the NGO / P RI with the support of UNDP. The Government of Kerala is planning to launch a pilot project of health insurance for the 30% families living below the poverty line. Currently, negotiations are under way with the I RA to seek service tax exemption. The proposed premium is Rs 250 plus 5% tax. The maximum benefit per family would be Rs 20 000. The amount for the premium would be recovered from the drug budget (Rs 100), the P RI (Rs 100) and from the beneficiary (Rs 62.50) while the benefits available would include cover for hospitalization, deliveries involving surgical procedures (either to the mother or the newborn). Instead of payment by the beneficiary, Smart Card facility would be offered. This scheme would be applicable in 216 government hospitals.

Page 49

CHAPTER 4 HEALTH INSURANCE PREMIUMS & CLAIMS SETTLEMENT PROCESS

Page 50

4.1 TAX EXEMPTION FROM HEALTH INSURANCE PREMIUMS 

Sec 80D covers Health Insurance. You can get exemptions of



Upto Rs. 15,000 paid for self + spouse + children.



Upto Rs 15,000 paid for Parents (Rs 20,000 if parents are senior citizens)



So in total if you pay your health insurance and your parents health Insurance premium, you can save upto maximum of 35,000.

Health Insurance Claims settlement process A bit on how health insurance claims processing works. In most cases, the Insurance companies appoint a third part administrator (TPA) for claims processing. That means once the health insurance policy is sold, the insurer passes on the baton to the TPA. In case of a claim, the insured has to get in touch with the TPA for all versification and formalities. There are 2 ways by which health insurance claims are settled: 

Cashless: For availing cashless treatment (only at authorized network hospitals), the TPA has to be notified in advance (for planned hospitalization) or within the stipulated time limits (for emergencies). The insurance desk at hospitals usually helps with all paper work. The claim amount need to be approved by the TPA, and the hospital settles the amount with the TPA/ Insurer. Typically there will be exclusions and such amount will have to be settled directly at the hospital.



Reimbursement: Reimbursement facility can be availed at both the network and non-network hospitals. Here the insured avails the treatment and settles the hospital bills directly at the hospital. The insured can claim reimbursement for hospitalization by submitting relevant bills/ documents for the claimed amount to the TPA. The TPA mode of claims settling has its own

problems. The TPA is incentivized to limit insurance claims and they are not Page 51

the one‟s who sells the policy. There are many cases where the insured had a tough time to claim for his hospital expenses. So before taking health insurance it would be useful to check who the TPA is and how good are they when it comes to claims processing. Internet search and a friendly chat with the hospital staff can give you good insight on the insurer/ TPA. There are also some health insurance providers who do not employ TPAs and does claims settlement directly (this is called In-house TPA). Saving on Health Insurance Premiums: 

Nobody likes paying more than its worth. Getting the most appropriate and affordable Health insurance is dependent on a few aspects like your choices, capability to choose and of courses the health conditions of the policy buyer. But by following a few steps you can save a good lot on your health insurance premium.



Smoker‟s health is always at risk, so people with smoking habits will end up paying more premium than a non smoker. So in order to reduce the premium, one has to quit smoking.



High blood pressure is not a good sign and is advisable to keep it under control. Keeping control on high blood pressure can help you reduce the premium cost.



If you are in good health, then automatically your premium cost will be lower than the people whose have health problems.



Comparing the quotes from various insurers is an important aspect to save on health insurance premium. Though you need to shop for a while to have an idea. Make sure you get some affordable online health insurance quotes.



Compare the benefits of various health insurance plans. Perform deep research to find out what discounts you can avail for in various appropriate policies.



Make your choices for cover very carefully; take only the coverage you require. Your random selection might end you up paying out more than actually required. So a right decision making is important.

Page 52

4.2 How to file a health insurance claim: 

Taking health insurance and paying premium is one story and filing for claim is another. Claiming benefits can be quiet tricky at times so you have to be smart and careful while filing for the claim. To file a Health Insurance claim with your Insurance Company one has to keep the following things in mind.



Claim form duly filled and signed by the claimant.



Discharge Certificate from the hospital



All documents pertaining to the illness starting from the date it was first detected i.e. Doctor's consultation reports/history



Bills, Receipts, Cash Memos from hospital supported by proper prescription.



Receipt and diagnostic test report supported by a note from the attending medical practitioner/surgeon justifying such diagnostics.



Attending doctor‟s certificate stating the nature of the operation performed, bill and receipt. Attending consultant's / specialist's / anaesthetists‟ bill and receipt, and certificate regarding diagnosis.



Certificate from the attending medical practitioner / surgeon that the patient is fully cured.



Details of previous policies if the details are not already with TPA except in the case of accidents.

Page 53

CHAPTER 5 FUTURE OF HEALTH INSURANCE

Page 54

FUTURE OF HEALTH INSURANCE: Given the situation, there are few issues of concern or barriers towards implementing a social health insurance scheme in India. These are enumerated below along with the possible way ahead. India is a low-income country with 26% population living below the poverty line, and 35% illiterate population with skewed health risks. Insurance is limited to only a small proportion of people in the organized sector covering less than 10% of the total population. Currently, there no mechanism or infrastructure for collecting

mandatory premium among the large informal sector. Even in

terms of the existing schemes, there is insufficient and inadequate information about the various schemes. Data gaps also prevail. Much of the focus of the existing schemes is on hospital expenses. 5.1 Managed health care: This is a new and innovative concept in health insurance. Broadly speaking, it refers to provision of total and integrated claims service, through what are known as Third Party Administrators, to health insurance policyholders. The services made available include: 

Wide network of hospitals/nursing homes all over India where a policy holder can avail of cashless services.



Cashless services mean admission to network hospitals without admission fees or deposits and payment of covered expenses at the time of discharge. Thus, there is no need for follow-ups for reimbursement by patient or relative.



Medical transportation



Personalized care and service.

Page 55

Future Change Expected: At present when the Health Insurance market is growing there are large numbers of proposals under consideration with IRDA, Insurance Companies, Government Agencies & Corporate bodies. According to newspaper reports some of these are:

Licenses are now being issued to Health Insurance companies by IRDA. Star Health was the first health insurance co. which has become operational in early 2006. Apollo DKV started operations in Aus 2007. Max, Fortis, Dr Reddy Lab has plans to enter this business.



In view of increase in medication costs the sum assured limit of Rs 5, 00,000 has been increased to Rs. 10, 00,000. New India is working proposal to increase the sum assured limit to Rs 25, 00,000. This is a welcome step.



In view of high claims ratio should there be limit on amount payable on specific disease or treatment. According to recent news item, which appeared in newspaper on June29, 2005 the proposal is to limit it at Rs. 1, 62, 000 for heart ailment. Customers have reacted unfavorably to this news item.



This will be major deterrent to customers to go in for Health Insurance of Rs. 5, 00, 000 or Say Rs.10, 00, 000. This proposal is contradictory to point 2. General opinion emerging is that if this is done then many customers will reduce their coverage from Rs. 5, 00,000 to Rs. 2, 00,000.

Insurance companies are becoming restrictive in issue of health insurance policies and are considering:

Minimum sum assured of Rs. 1 lakh.



Maximum age at entry of 50 years or so. Those having policies in force will however go on getting renewal of policies. There is a proposal of

Page 56

introducing concept of loading for senior citizens who are above 60 years. 

Insurance premium may increase by 100% in near future say in 2008 due to Prime Minister's announcement of Rs 2000 Crores health insurance plan for poor.



Hospitals / Pharma Co's may become promoters / investors in health insurance companies. It may result in better healthcare management as resources can be effectively utilized for the welfare of the society. Some projections are indicating that by 2010 Health Insurance premium will touch Rs. 25000 crores.



Stricter norms will be introduced for TPA's. Concept of Co pays to get strengthened so that senior citizens have no problem in getting insured. Each family gets a smart card! The smart card

entitles its bearer to a list of pre-specified in-patient services in the second month following enrollment. So, for example, someone enrolled in the month of February can use the card at designated hospitals as of April 1st of the same year through March 31st. (Provisions exist for pro-rata premium payments to the insurance company in the event of partial year enrolment subject to a minimum of six months.) The transaction process begins when the member visits the participating hospital and his or her card is swiped. If a diagnosis leads to a procedure, the appropriate prescribed package is selected in the software menu. Upon release, the card is again swiped and the pre-specified cost of the procedure is deducted from the 30,000 rupee total on the card. A receipt is printed and provided to the member. Initiating stand alone health insurance companies is a recent development in India, which is expected to boost the penetration of health insurance (HI) in the country. Currently less than 1% of the population is covered under commercial health insurance in comparison to almost 60-65 % in developed countries. It is expected that with greater penetration of HI, the access to health care will also increase. Lack of credible data and expertise in Health Insurance is expected to be fulfilled by Page 57

such a development. Recommendations of the subcommittee at IRDA on Stand Alone Health Insurance companies has also recommended lowering of capital requirements from Rs. 100 crores to Rs. 50 crores, as well as increasing Foreign Direct Investment over the existing 26% cap.

Page 58

5.2 LIC CHILD FUTURE PLAN: LIC Child Future plan is one of the plans that is designed specifically in order to meet the educational, marriage expense, and other important needs of the growing children. What is the risk cover that comes along with this policy? 

It gives a risk cover on the life of the child during the term of LIC Child Future plan as well as during the extended term which includes 7 years after the expiry of the term of policy. On survival of the life of the assured child, a number of survival benefits are provided to the child upto the end of the specified durations.



A lot of options are provided to choose in case of Sum assured, maturity age, term of policy, mode of paying the premium amount, and premium waiver benefit. The premium amount can be paid at the intervals of either yearly or half-yearly or quarterly or by means of the salary deductions during the entire term of policy. Before the policy term period, the premiums can be paid for either six years or five years.

What are the benefits provided in this policy? The benefits that are provided under this LIC Child Future plan are 

Survival benefit,



Death Benefit,



Auto cover



Premium waiver benefit.



Under the survival benefit, about 25% of the assured sum will be paid 5 years before the date of expiry of policy term and about 10% of the assured sum will be paid 4, 3, 2, 1 year before the date of expiry of the term of policy.



And on the date of expiry of the term of LIC Child Future plan, about 50% of the assured term will be paid along with vested and

Page 59

reversionary bonus and final or additional bonus will also be given if any. The Future Care Plan is a pure term assurance plan. This plan renders high protection at low premium rates. It gives attractive options of convertibility to an endowment plan. The eligibility criteria of Future Care Plan are as follows: 

The minimum entry age for the policy is 18 years.



The maximum entry age for the policy is 60 years.



The policy term available is 5 to 25 years.



The minimum sum assured under this policy is Rs 300000/-.



No limit is there for maximum sum assured.



The premium paying modes in this plan are yearly, half yearly and monthly. The monthly mode is available for ECS only.



The minimum premium installment is Rs 1500/- per annum.

The key features of Future Care Plan are as follows: 

This plan is considered to be the simplest form of insurance for a specific period of time.



This plan provides the maximum protection as an insurance plan for the premium amount.



Within a particular period of the policy the term plan can be changed into an endowment life insurance plan.



The premiums charged for the permanent plan will depend on the age of the insured without providing any further evidence of insurability.



This plan also provides for the payment of the death benefit to the beneficiary of the policy holder during the policy term.



There is no maturity benefit available under this policy.



The policy holder has the option to customize the policy by opting for the available riders such as; Accidental Death Rider (AD) and accelerated Critical Illness Extended Rider (ACI).

Page 60

Case studies Family Floater Plan The Gola family, comprising of Mr. Avinash Gola, Mrs. Kavita Gola and their child, had opted for ICICI Lombard‟s family floater health plan for a cover of Rs.2, 00,000. A floater plan meant that in case of a medical emergency, the cover of Rs 2, 00,000 would be spread across all the three family members. On 17 May, 2005, Mrs. Kavita Gola complained of infection. Mr.

Gola

immediately

contacted

our

TPA

helpline

and

obtained

preauthorization approval for admitting Mrs. Gola into a network hospital. Mrs. Gola was admitted to the hospital for two days for. Perianal abscess removal the total cost of treatment amounted to Rs 8,240 comprising of room/nursing expenses – Rs 2100, pathology – Rs 260, operation theatre – Rs 4120, pharmacy – 1260 and consultancy charges – Rs 500. The claim was processed for Rs 8000. The Gola family sailed through the crisis with the help of ICICI Lombard‟s health insurance floater plan. Moreover, the entire family was still covered under the plan for any future medical contingency. Individual health insurance plan: Mr. P R Arunagiri, who had bought our Individual health insurance plan for Rs 2, 00,000 cover, suffered fracture in an accident. He

being

aware

about

cashless

hospitalization

procedure immediately contacted our TPA helpline and got pre-authorization approval for availing cashless facility. He was hospitalized for two days and incurred a total cost of Rs 8990. However, ICICI Lombard health insurance plan came to Mr. Arunagiri‟s rescue. His entire expenses -- Rs 1875 (nursing), Rs 445 (x-ray), Rs 350(operation theatre), Rs 570 (pharmacy) and Rs 5750 (surgeons fee/ consultancy charges) were put up for claim. Out of Rs 8990, the claim was processed for the final amount of Rs 8961, which was directly borne by the company.

Page 61

CHAPTER 6 CONCLUSION

Page 62

CONCLUSION Health Insurance may be the most important type of insurance you can own. Without proper health insurance, an illness or accident can wipe you out financially and put you and your family in debt for years. So what is health insurance and how does it work? Health insurance is a type of insurance that pays for medical expenses in exchange for premiums. The way it works is that you pay your monthly or annual premium and the insurance policy contracts healthcare providers and hospitals to provide benefits to its members at a discounted rate. This is how hospitals and healthcare providers get listed in your insurance provider booklet. They have agreed to provide you with healthcare at the specified cost. These costs include medical exams, drugs and treatments referred to as "covered services" in your insurance policy. Health insurance is a type of insurance that pays for medical expenses in exchange for premiums. The way it works is that you pay your monthly or annual premium and the insurance policy contracts healthcare providers and hospitals to provide benefits to its members at a discounted rate.

Page 63

BIBLIOGRAPHY WEBSITES:

a. www.licgov.in b. www.moneycontrol.com c. www.kotakmahindra.in d. www.hdfc.com e. www.licindia.in f. www.bajaallianz.com g. www.icicprudential.com h. www.wikipedia.com i. www.google.com

Page 64