1- Introduction with Features Should you buy Health Insurance from Life Insurance Companies? Is it worth it?

S uresh K. Sethi Recent product launches of LIC & Reliance Life Insurance in the form of Health P lus & Wealth Plus Health have created good awareness of the product among people all over the country. I have come across many people who think that this produc t is same as Health Insurance or Mediclaim Insurance which is sold by large numb er of General Insurance Companies and 2 Health Insurance Companies (see box). The fact is that product being offered by life insurance companies is a totally different product. Let us see the comparison between the products Life Ins. Co s v s. General Ins. Co s Life Ins Co s General Ins Co s / Health Ins Co s Term Long term say 10 years or 20 yrs. Premium to be paid on receipt of premi um notice ,same way as in other life insurance products Generally 1 year . Every year it is to be renewed like motor insurance policy. For very few co s 2 years duration policy is also possible. Hospitalization It is in form of Hospital Cash Benefit (HCB) or Major Su rgical Benefit (MSB). MSB has limit of 3 times during the complete term of policy. If you have policy for 20 years period then you are permitted to claim under MSB head for 3 times o nly. Pays for hospitalization, pre hospitalization, and post hospitalization expenses. Even 3 times in a year it is possible. Sum Assured is the limit. Sum assured It is mentioned in the form of Hospital Cash Benefit or Major Su rgical Benefit. HCB is described in terms of Rs./day, for example Rs.2500/ day. MSB is 200 times of HCB. If HCB is Rs.2500 per day then MSB is Rs.5.00 Lakh. It is mentioned in the form of sum assured say Rs. 2 lakhs or Rs. 5 lakhs Practically all illnesses are covered except those in exclusion list. Claim It is in form of No. of days one is eligible multiplied by HCB as mentio ned above. During first year limit is 18 days multiplied by Rs.2500 which means maximum claim can be Rs.40,000 only. It is in terms of Rupees and has direct correlation with bill amount comprising doctor fees, room charges, surgery, medi cine etc. This is subject to maximum limit of sum assured. If everything is fine 100% of claim amount is paid. Savings Part of the premium paid by you is invested in units (like mutua l fund) Nothing is invested in units. If no claim is lodged during the year then you do not get back any part of the You get back payment at time of maturity of the policy say after 10 year s or 20 years. premium except in the form of no claim bonus or discount as appl icable for the policy to be issued in year2 Now that we have understood the broad concept of this policy, let us cover the p roducts of LIC Health Plus & Wealth Plus Health in detail. The definition of various terms used in this policy is: Hospital Cash Benefit (HCB): A daily benefit is payable in case the insured is h ospitalized due to either accidental body injury or sickness. It has no correlat ion with hospital bill. Major Surgical Benefit (MSB): In the event of the insured undergoing one of the major surgeries (as defined in the table of LIC Health Plus) a lump sump benefit (regardless of the actual costs incurred) equivalent to the percentage of the s um assured mentioned against that surgery will be payable on providing proper pr oof of surgery to the satisfaction of the corporation. It is always easier to understand a product when we compare using an example:Vashisht is aged 32 years and wishes to take this policy so that he can have max imum HCB of Rs. 2500/ day. Then the comparison of LIC Vs Reliance appears as fol lows: -