Subject Of Safety

Chandralekha Mukerji        Print Edition: July 2012

Preparations for sending your child to study abroad can take months. From getting prospectuses to filling up forms, applying for scholarships, writing exams, calculating expenses and booking air tickets - it is a massive task which needs meticulous planning.

In the middle of all this, one not-so-minor detail is often overlooked - an appropriate insurance cover.

"While having an insurance policy is a must in universities in the Schengen area and the US, it is optional in the UK, Australia and South East Asian countries such as Singapore and Malaysia," says Neelesh Garg, executive director, ICICI Lombard.

But it always sensible to pack a safety net. For instance, while you will come under the National Health Service or NHS that makes your medical expenses free of cost if have a student visa in the UK, you might consider insurance for covering your belongings, important documents or any third-party personal liability, to make your stay protected.

"Even if the university or the country does not insist on your child having insurance, it is advisable to have one, as medical costs in developed countries are much more than in India. For instance, in India, a doctor's consultation is Rs 150-300, while in the US it is $250-300," says Tapan Singhel, managing director and chief executive officer, Bajaj Allianz General Insurance.

There are three ways to buy this cover-from the university, from an insurer in the foreign country or an Indian insurer.

DO YOU HAVE AN OPTION?

Before comparing the plans, find out your options. Some universities make it mandatory for students to buy insurance from them. Some have clauses which Indian insurers' policies may not comply with.

Quote

Apart from the cost advantage, domestic insurers offer additional covers such as study interruption, sponsor and travel protection.

Neelesh Garg

Executive Director, ICICI Lombard

If the institution of your choice falls in these two categories, you have no choice but to take whatever you are offered. For instance, MIT (US) has its own student medical plan but allows waiver only if you have a comparable health insurance that meets the universities standards (they have detailed guidelines). So, if the Indian insurer doesn't fulfill all the criteria, you'll have to buy from the university.

Some universities do not accept an insurance policy from insurance carriers outside their country. That means, either you buy from the university or search for a local insurer in their country who complies with the university's rules. Since buying a cover from a foreign insurer sounds complicated to many, the majority chooses to fill up the insurance documents along with other university formalities.

EVALUATING ALTERNATIVES

Rules for international students differ from university to university. The sum insured and the type of insurance required, too, vary. It is important that the plan you buy complies with the university's guidelines. This is why most students buy from the institution. The premium is often billed with the fees.

"Buying the university acclaimed insurance plan is an expensive option but people choose it first up because most are uncertain about the rules and are ignorant or have less knowledge about alternatives," says Vaibhav Gupta (22), who is pursuing his Masters in Computer Science from University of Texas at Dallas.

Vaibhav was lucky to find help. After consideration, he bought a plan from a domestic insurer which he says "worked out to be way cheaper than what the university or local US insurers were offering."

The premium charged by domestic insurers is about one-third charged by foreign universities or insurers. "The cost difference could be in the range of 20-30 per cent between insurance policies available in India versus those available abroad for the same coverage," says Gaurav Garg, MD and CEO, Tata AIG General Insurance.

This is more applicable in case of the western countries. The health insurance charges as per Boston University's fee structure is $1,914, that is, Rs 95,700 (calculated at Rs50/$). But if you buy a policy from a domestic insurer, say, ICICI Lombard (taken for illustrative purposes) with a sum insured of $50,000, the annual premium will be Rs 14,897.

On the other hand, China Medical University will charge 600 CNY (Chinese Yuan Renminbi), that is, Rs 4,646 (calculated at Rs7.74/CNY). A cover from a domestic insurer will cost you around Rs 8,000 in this case. However, one shouldn't just look at the cost and should compare the benefits as well.

Standard university plans cover only health whereas domestic policies offer both medical and non-medical benefits. Indian insurers, on their part, offer benefits such as a travel plan (covers loss of passport and check-in baggage), compassionate visits (reimbursement of parents' travel and stay cost if the student is hospitalised), third-party liabilities, study interruption protection (reimburses fee for any semester the student skips due to medical or compassionate reasons) and sponsor protection (reimbursement of tuition fee if the person funding the education dies).

MAKING A CHOICE

Ideally, a good student insurance should cover medical situations, evacuation and repatriation, personal liability and accident, tuition fee, sponsor protection and travel.

The choice should depend on four parameters - flexibility and size of the cover (sum insured), claim settlement process and track record, hospital network (tie-ups with hospitals on or near the campus) and benefits apart from the medical ones. While an Indian insurer may score on cost efficiency and benefits, the university plan may provide a more extensive health cover with a better network of hospitals.

"Plans offered by universities provide cashless treatment in hospitals on and near the campus. These hospitals may not be part of the cashless network of Indian insurers," says Rahul Aggarwal, CEO, Optima Insurance Brokers.

Also, do not forget to read the details, especially the deductibles and sub-limits section. For instance, the Indian insurer may have a deductible of $100 while the college plan may have a deductible of $500.

This means if your hospital bill is $1,600, while the Indian insurer will reimburse $1,500, the college plan will get you only $1,100. If converted into rupees (at Rs 50/$) the difference is Rs 20,000. Pick a plan that provides extensive coverage within your budget and complies with the university guidelines.



HAVE AN EXISTING HEALTH COVER?
An overseas student insurance policy is a specially designed plan that takes care of health and travel-related risks while the student is studying abroad. So, does this mean one should stop paying premiums for an existing health cover to avoid duplication? Experts advise that one should continue the existing health plan to enjoy continuous health cover.

"This will ensure that the student does not lose accrued benefits on the domestic health policy after his return to India. An ideal thing would be if the insurer agrees to protect the accrued benefits and suspends the policy for the period the student is covered by the overseas policy," says Gaurav Garg, MD and CEO, Tata AIG General Insurance.



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