Must-Know Health Insurance Rules

By | October 9, 2017

6 important changes brought about by new health insurance rules

Health insurance has witnessed steady growth in the recent past. Growing awareness and rising medical costs have convinced more and more people to opt for Health Insurance. This steady growth can be also be attributed in no small part to the IRDAI (Insurance Regulatory and Development Authority of India) bringing about changes to the Health Insurance rules in India.

Here’s everything you need to know about the Health Insurance regulations that were initiated in July 2016, and how they can benefit you as a Health Insurance buyer.

Insurers can offer combi plans (Any Life and Health Plan)

Until 2016, insurers were only allowed to offer combi plans which included Term Life Insurance and Health Insurance. But, as per the rules announced in 2016, insurers can include any Life Insurance plan (such as Term Plans, Endowment Plans, Money-back Policies, ULIPs, etc.) along with a Health Insurance plan, in the combi plans offered.

What’s the benefit? With combi plans such as these, insurance agents will be able to offer complete packages (any Life Insurance Plan and Health Plan) to the customers. Customers can also enjoy the benefits of both Health and Life Plans in a single policy. It will also be easier for them to manage both plans since they come in the form of a single policy.

Cumulative bonus will be a part of Benefit Plans

If a cumulative bonus is a part of your plan, it means that your Sum Assured will increase by a specific percentage every year, provided you don’t make a claim. This increase is subject to a maximum limit and you wouldn’t have to pay any additional premium. So, you’ll benefit from a higher cover amount without any rise in premium. However, if a claim is made, the cumulative bonus on your plan is reduced accordingly.

Previously, the cumulative bonus feature wasn’t a part of Benefit Plans (like your Critical Illness Plan), but in recent times it has been added to these plans and is mentioned in the policy document and prospectus as well.

Take the HDFC ERGO Health Suraksha policy, for example. This policy lets you avail a cumulative bonus at the end of every claim-free year. This will be given as an increase in the sum assured. You are also allowed to include the cost of health check-ups when you complete 4 claim-free years. The best part is that you can avail cashless hospitalisation services across 5,000+ hospitals in India. You don’t even need to go through a health check-up for getting the policy if you are less than 45 years old, as long as you have no pre-existing diseases.

Additional Reading: 7 Types of Health Insurance Plans

Wellness benefits

In order to encourage insurance buyers to improve their health, insurers offer rewards such as discounts in premium or on consultation/diagnosis services offered by the providers within the policy’s network. These incentives will be mentioned in the policy document and prospectus.

If you opt to buy a Health Insurance policy earlier in life, when you are fit and free from any health concerns, you will get an early bird discount. The IRDA regulations for 2016 have made it clear that taking up a healthcare policy early in life, having a healthy lifestyle, and adopting wellness habits should all make you qualify for a discount in premium.

Here’s an example. A policy from Cigna TTK named ProHealth Protect grants reward points equal to 1% of the premium that you pay each year. Each reward point will be equal to Rs. 1 and you can redeem the points for a discount in premium on your next renewal, or they can be used to avail services through the insurer’s network partners. The policy has a voluntary co-payment option where you can choose to pay the first 10% or 20% of the claim, while the rest will be covered by the insurer. You can also opt for a critical illness add-on cover.

Pilot products

To encourage insurers to bring about new initiatives within the insurance industry, IRDAI has permitted insurers to test new waters with relation to products offered. Health Insurance companies can now offer pilot products for a maximum period of five years, after which the policy will auto-convert into a regular Health Insurance plan. This regulation virtually opens the door for new innovations in the Health Insurance product line with many new and innovative policies likely to be introduced in the near future as pilot products.

However, do keep in mind, while opting for such policies, that the Health Insurance companies reserve their right to discontinue the pilot products at any time if they do not turn out to be feasible for them.

Insurers are allowed to design their own proposal form

All insurance companies – whether they are General, Life or Health – can design their own proposal form. As a part of the contract you enter into with an insurance company, the proposal form usually seeks personal information (general, health, financial, etc.) about yourself. The rule allows insurance companies to formulate their own proposal form. Insurance buyers are strictly prohibited from sharing any information with third parties.

No more indemnity-based products with Life Insurance

Some Life Insurance policies used to offer indemnity plans (like Mediclaim). These plans were used to compensate policyholders for their hospital expenses.

The IRDA, in its Health Insurance Regulations 2016, has barred Life Insurance companies from offering any medical insurance products. This means Health Insurance companies will now have exclusive policies catering to the medical needs of the policyholder.

As per the 2016 regulations, Life Insurance companies can continue to offer defined benefit Health Insurance plans where the benefit described in the policy is paid out if any pre-defined disease befalls the policyholder.

Introduction of credit-linked Health Insurance

Just like Life Insurance companies offer credit-linked or loan-linked plans, the new IRDA guidelines have given Health Insurance companies a go-ahead for similar products. Health Insurance companies can now offer credit-linked individual and group Health Insurance plans. This means that if the policyholder gets sick and is unable to repay loans, he or she can use the claim amount for repayment of their dues.

Portability cuts out agent commission

Policy misselling is a concern when it comes to any insurance, including Health Insurance. In an effort to combat this, the IRDA has introduced the portability clause. Whenever you opt for Health Insurance portability, you are well within your rights to port your policy to a different insurance company if you do not like your insurance plan. Since the agent selling the policy won’t receive commission benefits anymore if the policy is ported to another insurance company, the chances of selling inadequate policies to customers would reduce.

The new IRDA guidelines and regulations are likely to boost sentiment in favour of Health Insurance by making way for the introduction of new and innovative products in this segment in the near future.

Additional Reading: FAQs On Health Insurance In India

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