Covering the benefits of health & life

There's a lot to be said about the two-in-one advantage, be it in technology, household appliances, apparel or anything in between, since it typically saves time, space, money or any combination of the three. So it makes one wonder why India did not hit upon the idea of health and life insurance as a single product sooner. Yes, we are talking about a single policy combining pure life risk insurance with one that covers medical expenses.

Thankfully, with the Insurance Regulatory and Development Authority (Irda) recently issuing guidelines for the 'health and life combi' products, it's a matter of months before you will be able to buy the twoin-one policies.

According to Irda, "It is envisaged that the proposed product class will enhance the penetration of insurance by offering a wider product choice to policyholders." These policies will be promoted by life and non-life companies and sold at both individual and group levels. However, in the case of health insurance floater policies, which cover the entire family as opposed to individual policies for each member, only one earning member of the family (who is also the proposer for the health policy) will be given the pure term life insurance coverage. This will, of course, be subject to insurable interest and other applicable underwriting norms of the respective insurers.

Though several life insurance companies currently sell health insurance policies, these are restricted mostly to hospital cash, where the insured is paid a lump-sum. Under the new plan, these products may also include features such as surgical or hospital expense benefits, whether in-patient or outpatient, maternity and dental benefits, in addition to the term life cover.

According to the guidelines, the premium for both health insurance and life cover will be mentioned separately in the policy document. Also, on renewal, customers will have a choice to continue with either the health plus life cover or only health insurance. Says Sumit Rai, senior vice-president and business head (health and retirement), Max New York Life Insurance: "Not all life insurance companies have health cover products. This will provide an opportunity to the life companies to enter the health cover business, which is one of the fastest growing insurance segments."

As a consumer, you can expect a plethora of choice. Irda has permitted a life insurer to tie up with only one non-life insurer, and vice versa, but between these two insurers any number of combi products can be promoted. Adds Jandhyala Hari Narayan, chairman, Irda: "Even as insurers leverage on the marketing and operational network of their partner insurers, the proposed product innovation is expected to facilitate policyholders to pick an integrated product of their choice without the hassle of shopping for separate covers from different insurers."

Of course, the icing on the cake is having to remember fewer premium due dates.

Points to ponder

• The liability to settle claim benefits and address disputes vests with the respective insurers—health benefits with the non-life partner and life insurance benefits with the life insurer.
• Policyholders will be eligible to discontinue any part of the policy during the policy term.
• Where guaranteed renewability of health insurance plan is allowed, the health cover portion of the combi product is entitled to this facility.
• Combi products are not allowed to be marketed through 'bank referral' arrangements.

Trivia and telling figures

• Rs 8,191 crore is the amount invested by foreign fund houses in the first fortnight of 2010. This is the highest FII inflow for January since 1993.
• 5 per cent is the estimated rise in the wholesale prices in 2010-11 from 3.4 per cent this year.
• 2.6 per cent was the appreciation in the rupee value against the dollar in 10 days (from 31 December to 11 January).
• 38 per cent is India's current savings rate, the prime reason for the economy to have borne the global financial crisis.
• 6-9 per cent is the projected hike in salaries in 2010. Infrastructure firms top the chart with over 10 per cent hikes.