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Juggling Covers

Chandralekha Mukerji        Print Edition: July 2012

You manage all your credit cards, numerous bank accounts and a diverse investment portfolio with ease. How about handling different health plans in a crisis? Claim filing, a complicated process in the best of times, can become trickier if you have more than one policy.

With rising healthcare costs, the variety of policies available and awareness, it's common to find people having more than one health policy. While increasing your cover is not a bad idea, it is important to prepare to ensure that your claims are approved without hassles.

For this, you need to know the claim procedure, which depends on the type of policies you hold.

While many have employer's group mediclaim and personal policies, there are other policies and combinations as well.

COMMON COMBINATIONS

General insurance companies usually sell health indemnity policies under which they reimburse the hospital bill on the basis of cover (sum insured) and policy sub-limits. However, one needs to be in hospital for at least 24 hours for filing a claim under these plans. These are typically one-year contracts and have to be renewed every year.

Then there are critical illness plans and personal accident policies, which have fixed-benefits. Here, the policyholder gets a predetermined sum at the vesting date. Some life insurers also sell fixed-benefit health plans, unit-linked health plans and hospital cash-benefit policies. These contracts can be of longer duration.

Since these plans are different, the claim procedures differ according to the combination you have.

We look at typical situations a policyholder with multiple covers may encounter at the time of making a claim and suggest ways to ensure smooth settlement.

Group and Individual Indemnity policy:
Claim can be lodged with any of the two insurers. However, experts say one must first exhaust the group claim limit.

"The group health policy should be the first choice as the claim will not result in an increase in premium. If you file a claim for the personal policy, the insurer is likely to apply a loading charge which will impact your renewal premium," says S K Sethi, chief executive officer, Ria Insurance Brokers.

Also, group policies are slightly more liberal and cover even pre-existing diseases. In an individual policy, one has to usually wait for three-four years for coverage of pre-existing illnesses.

Quote

Having a health plan would not affect underwriting for the second health policy and it would be treated as a fresh proposal. However, it helps if the existing policy has a good claim experience.

Arun Mehrotra

Head of Retail Underwriting and Product Development, IFFCO-Tokio General Insurance

However, it is important to maintain transparency. Intimate both the insurers and their third-party administrators, or TPAs, about the claim. This will help if you exhaust the limit of the first policy and need the second one as well.

"Once the first insurer has processed the claim and made payment, the customer will have to write to the serving TPA that he would like to claim the balance. The TPA will then issue a settlement note and certified copies of original documents submitted by the customer," says Sudhir Sarnobat, CEO, Medimanage.com, an online health insurance service provider.

The second insurer will pay on the basis of a certificate from the first stating that it has the original documents and a settlement note giving details of the amount the insured has already claimed.

In pre-existing diseases, if the waiting period norm has been met in the first policy but not in the second one, the latter will not pay anything. But to maintain transparency, the insured should keep the second insurer informed at all stages.

Two personal reimbursement plans:
If you have two reimbursement policies, the 'contribution' clause will kick in. This means both insurers will pay in proportion to the coverage.

If you have declared that you hold another health policy in both proposal and claim forms, you need not inform the second insurer separately.

"The first insurance company can settle the complete claim (up to the sum insured limit) and claim the pro-rata settlement amount under the 'contribution' clause of the policy from the second insurer," says Arun Mehrotra, head of retail underwriting and product development, IFFCO-Tokio General Insurance.

Personal reimbursement plus fixed-benefit plan:
Typically, fixed-benefit plans such as health plans sold by life insurers and critical illness and disability covers pay on diagnosis. The policy lapses after the claim is settled. The process is usually different from that of regular indemnity plans, which settle claims on the basis of actual hospital expenses. Hence, one can make concurrent claims with fixed benefit and reimbursement plans.

"However, in some policies (like hospital cash benefit plans) where the insurer needs the complete set of documents, the customer will have to take permission from the insurer to submit photocopies," says Sarnobat.

Two different plans from same insurer:
If you have two different plans from the same insurer, understand the policies and procedures right at the outset. "Though both the policies are from the same company, the accounting and underwriting policies may result in division of claim amount between the two policies," says Antony Jacob, chief executive officer, Apollo Munich Health Insurance.

On the other hand, having the same TPA for both the policies may be an advantage. The claim settlement time may be less as documents for both the policies are managed by the same set of people. "The time and effort required for transfer of medical records, duplication and verification is shorter if the TPA is the same," says Antony.

FOR A SMOOTH CRUISE

Honesty is best for the health of your policy. No matter which combination of policies you have, declare all your policies while buying a new one. This ensures an accurate premium rate and a hassle-free claim experience.

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