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Protect yourself

Tuesday, April 17, 2018

One must have adequate health insurance to protect savings being eroded due to major illness of family members, says Shreeniwas Gadiyar

Mediclaim is a word generic to health insurance. Actually the product most popular is Hospitalisation Benefit Insurance. The first product introduced in 1986 was branded Mediclaim and now all health insurance is called Mediclaim. The popularly known “Mediclaim”  mandatorily requires hospitalisation for minimum 24 hours. The exceptions to this are day-care surgeries like cataract, piles or hernia which do not merit a 24-hour stay in hospital.

Some common exemptions in Mediclaim policy is that in the first 30 days only accident is covered, certain minor diseases and surgeries are covered after two years and pre-existing conditions like diabetes or hypertension (and complications arising therefrom) are covered after 48 months of continuous cover.

The insurance company has tie-ups with well-known hospitals in every locality where the customer does not have to pay any bill. The Company pays directly to the hospital. In case there is no cashless facility, the customer has to first pay the hospital. The original bills and records are then submitted to the insurance company who has to settle the claim within 30 days of submission of all documents.

Many hospitalisation policies have room rent as the basis of calculation of eligibility of the payable amount under the claim. The definition of room rent includes nursing and other incidental charges. One should therefore check the room rent limit clause under the policy.  Some non-medical expenses like registration charges of hospital are not payable under the policy. It is therefore a misconception that a Mediclaim policy will reimburse entire claim without any deduction. It is important to read disallowable items listed in the policy clause given alongwith policy document.

Mediclaim, unlike life insurance, is an annual product. It has to be renewed every year by paying fresh premium. The premium is likely to change every year dependent on claim experience of the company during the year. The standard premium table of every insurance company also has age bands for the premium. On completion of a certain age and entering a new age bracket, the premium increases.

Mediclaim is an evolving product and every day there is some improvement in the field. Many companies offer products without limit on room rent as well as specialised Mediclaim designed for cardiac patients, diabetics, cancer patients, autistic children as well as senior citizens.

Some companies have introduced attractive features like no-claim bonus, auto restoration, free annual check-ups, reimbursement of medical bills on an annual basis and many more attractions.

Mediclaim is available under individual limit per family member or on floater basis where common limit is given for all family member. Generally, floater policies are much affordable and therefore advisable.

Critical Illness Insurance is the least known but the most important product in health insurance industry. It covers listed critical illnesses which are normally a minimum of 30 or more. On the first occurrence of a listed critical illness, the insurer pays a lumpsum amount for treatment of the disease. One can opt for monthly payouts for treatment of critical illness.

On the taxation front, there is a deduction of Rs. 25,000 allowed under Section 80 D of Income Tax Act, 1961 for medical insurance of self and family. Additional tax benefit of Rs. 50,000 is allowed for health insurance premium for dependent parents.

While the wholesale or consumer price index based inflation is between 6% to 8%, during the past couple of years medical inflation is at astounding rate of 15% to 18% making medical treatment out of bounds for the common man. One must have adequate health insurance to protect savings getting eroded due to major illness of any family member.

Shreeniwas Gadiyar is an investment consultant based in Thane

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