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Wednesday, October 13, 2010

Mediclaim Portability: Soon a Reality

Here’s some really good news coming for all the medical policyholders with IRDA saying that portability will soon be introduced. The customer will now have the opportunity to find an insurance carrier that better suits their needs and lifestyle. Policyholders who are not satisfied with their current provider will be able to switch to another health insurer without any change in the premium outgo.

The facility will be available to policyholders who are insured for a sum of 1,00,000 and above. Currently, the health cover given to any policyholder has to be renewed every year and if there’s no claim the policyholder is entitled to a bonus in the form of an increased sum and for every claim-free year this bonus gets accumulated.

The industry and the regulator are working on the minimum benefit that would be carried forward in case of change in the insurer as two insurers do not generally have the same mediclaim policies. The regulator is also considering portability for car insurance.

There are several benefits on the basis of which policyholders can compare different policies provided by various insurance players such as hospitalization expenses, day-care procedures, effects of cumulative bonus and various types of illnesses covered under critical illness domain. Besides the service factor, policyholders can also compare insurers on the basis of denial of their policy renewal and the increasing costs of their renewal premiums. Medical insurance portability will be most useful for the higher aged people, as currently they have problems in changing insurers even though they might be dissatisfied. This is primarily because the new insurance company treats the policy as completely fresh, and the diseases which might have been covered by the previous company are now treated as pre-existing.

So the policyholder can now switch their insurer if they are getting rude replies from their executives and are not satisfied with any of their services without any change in the premium.

In a country like India where medical insurance penetration is merely 6-7%, the new ruling when put into practice by the insurance regulator, would bring a big fillip to the industry as more competitive and customer friendly services are most likely to be provided to the policyholders.

We do hope that medical insurance portability in its basic form will be introduced shortly as we have been hearing about it for quite some time now.

Health Insurance Claims to get time-bound

After showing a lot of leniency, public sector insurance companies have finally decided that they will deny claims to policy holders if they fail to submit the relevant documents post discharge within the stipulated time period. This will help check fraud in the reimbursements process.

Many private insurance companies have flatly refused processing of claims if the relevant documents have not been submitted beyond the specific number of days. By doing so they have been able to control their adverse claim ratios.

Public sector insurance companies are now saying that health insurance claims have to be submitted within seven days from the discharge date. In certain cases, the insurance company will entertain claims upto 15 days from discharge date. However if the claim is beyond 15 days from the discharge from the hospital, then this has be approved by someone at the regional manager level.

Toriental Insurance company also asks its TPAs to get the papers from the policyholder within 7 days as specified in the policy and in exceptional cases, these papers can be submitted within 30 days.

New India Assurance Company has also approached the Insurance Regulatory and Development Authority (IRDA) to allow them to curtail the stipulated period for submission of claim paper from the existing 30 days to seven days.

An official from New India Assurance Company said that an internal analysis has shown that allowing an inordinately long period post hospitalization for claims to be made only benefits the fraudsters from putting in fraudulent health insurance claims. The more the time available, the more time the scamsters have to prepare fraudulent papers in support of their claims. It is difficult to carry out investigation with the hospitals for claims that come in many months after discharge.

However , one also has to note the fact that just because the patient has been discharged does not mean that he (s) has been completely cured and there might need to be significant post hospitalization claims. A balance needs to be struck in terms of fixing the timelines for your health insurance claims.

Insurance Premiums: Stay fit and pay less

If you are not in the best of your health, then you certainly have to miss out on the discounts that insurance companies give out on insurance premiums. Insurance companies reward the healthy with lower insurance premiums and loyalty benefit programmes. This may not yet be true for health covers but life insurance companies are giving out term covers at cheaper rates. As the health insurance market evolves, we expect to see lower health insurance rates for people with better health indicators even though they may be of the same age.

It is very well known that non-smokers and women are charged lower premiums on most life insurance policies. A host of other factors besides smoking play a major role in determining the premium. The health of the person to be insured plays a critical role in underwriting the life. If a person has hypertension, diabetes or is obese, his/her premium will be higher as the risk to the company is higher as compared to a healthy person. A 40 year old person suffering from diabetes may have to shell out double the amount for premium as compared to a healthy person. Adverse medical conditions are rated according to the severity  and combination of conditions.

If you fall into the category of high net worth individuals (HNIs) things get much better. Besides offering discounts to non-smokers and women, some insurers like ICICI Prudential Life, Birla Sun Life, SBI Life and Kotak Life offer a special category of term policies, primarily aimed at affluent individuals. Given their lifestyles, insurance companies presume that they are less prone to diseases and have lower mortality rates as they take better care of their health & have easy access to good healthcare which further ensures that they are hale and hearty most of the time.

Even within this category there can be smokers, non-smokers and preferred non-smokers. A preferred non-smoker is the one who does not suffer from any ailments at the time of buying the policy in addition to abstaining from tobacco. Max New York Life has introduced three different underwriting categories based on lifestyle. Discounts could be as much as 36% . When it comes to conducting medical tests like ECG, some insurance companies also offer home visits to avoid any inconvenience caused to the HNI policy holders.

The policies which can be bought only after stringent tests are primarily targeted at well heeled individuals but the cover is certainly not available at throwaway prices. The underwriting process that the proposer has to go through is also very stringent. The tests could include blood profile, ECG, microscopic urinalysis (MSU) and urine cotinine test (for non-smokers) depending upon the insurance seekers’ age and life cover chosen.

As compared to unit-linked insurance plans (ULIPs), money-back policies, endowment schemes etc Term Plans definitely qualify as the best option. While they do not promise any returns after the completion of the term but they fulfill the basic purpose of obtaining a life insurance policy which is replacing the insured’s income to ensure that the dependents are financially secure even in the absence of the breadwinner.

There are also online insurance premiums comparison sites that can guide you with proper information.

How to save on Insurance premium

With inflation at an all time high of 9%, everyone is thinking of how to reduce their bills. If one can save on the insurance premiums, it will definitely not hurt. The total cost of your health, life and auto insurance policies puts you back by a few thousands every year. If you have bought a traditional plan, the sum would be well over 50K per annum, so even a 25% cut in that expense can help you save INR 12,500. You must be wondering if that’s possible without compromising on the total sum assured and we would say ‘Yes,that’s possible”.

Quit Smoking

Companies like Birla Sunlife, Kotak Life, Max New York Life and Met Life have special term plans to offer to non-smokers, which are cheaper by 20-40%. For example, a 30 year old man who is a non-smoker can buy a Rs 25 Lakh preferred term plan from Kotak for Rs 3943 a year, however a smoker of the same age will have to cough up Rs 1500 more for the same plan. Over a 25 year period, a non smoker can easily save Rs 37,500- and not to mention all that one would save on cigarretes! There’s a catch here that these schemes are not available for term plans with a lower cover. For example, Kotak and Met Life offer this discount only if the sum assured is more than Rs 25 lakh. So one must compare these special policies with other term plans and opt for the cheapest option.

Pay Annually

Higher the premium payment frequency, higher is the premium outgo due to loading. For a 40 year old male, a 25 year term plan with Rs 25 lakh sum assured from Aegon Religare would cost Rs 987 per month or a total of Rs 11,844 for a year. However, if annual payment mode is chosen, the premium would be Rs 11,350 which is Rs 500 less than the monthly payment mode.

Go for Family Pack

Individual health plans are always expensive and you are most unlikely to use up the entire cover. For instance, if you have a family of 4 and you have bought individual policies of Rs 5 lakh each, you’ll have to shell out anywhere around Rs 30,000 for the same and the total medical expenses of the entire family would rarely touch Rs 20 lakhs. So, it’s far better to go for a family floater health insurance plan under which all the family members can share a cover of Rs 5 lakh. One can thus save around Rs 10,000 a year. And if you have a chronically ill or old person at home then it’s always better to get an additional cover for them.

Use Group Advantage

One can also reduce the health premium covers by extending the employer-sponsored group insurance to his/her family. These plans are 20-25% cheaper than family floater plans. The actual cost of these plans depends on the scope of the cover, past experience of the insurer with the company and the number of employees in the organisation. But they are certainly cheaper that individual or floater plans.

Apart from all this, different insurers offer different rates for similar policies. It is very difficult to get a good sense of the rates and do a price comparison unless you do thorough comparison of insurance premiums online through sites

Family Floater Health Insurance : Is it the best choice always?

If you have no one who is financially dependent on you in your family, you can simply go without a life insurance policy but a health insurance cover is something that cannot be ignored. The reason for it is that the soaring costs of healthcare and the unforeseen event of hospitalization can hit your financial health very hard. So it is prudent to go for a good health cover without thinking of a good time to come. If you are thinking of a health plan for the entire family, the following things have to be kept in mind:

The primary advantage that a family floater provides is that all the members can be insured through a common, mini group health policy rather than individual policy. The premium paid is less than what it could cost if each of the members were to buy a policy, and also administratively it is simpler to maintain than managing 4 or 5 policies, as the case may be. However, a big disadvantage of this health policy is if one member needs to draw down the entire sum in one policy year- in that case, the other members are effectively going without a health insurance cover.

Here’s an example of a family of 4 members-father, mother, son and daughter. Let us see how the individual and family floater plans work for them.

1). If one takes a family floater policy of Rs 5Lakh or if one takes an individual policy of Rs 3Lakh each for each of the family members. Now if the father falls ill and gets hospitalized and the hospitalization expenditure is Rs 4lakh then in the family floater plan the entire sum would be payable while in the individual plan only Rs 3lakh would be payable.

2). If the individual policies were also of Rs 5Lakh each then there would not have been any impact on the claims but the overall cover would have been much higher. Let us say, apart from the father who fell ill and incurred expenses of Rs 4lakh, the mother was also hospitalized and incurred an expenditure of Rs 3 Lakh. In this case, the family floater plan would have paid them only Rs 5lakh while the individual plans of Rs 5Lakh each would have covered the entire expenses of Rs 7 lakh on both the father & the mother. Of course the total premium paid would be higher in the case of the individual health plans.

In a family floater plan, along with the issue of cover, another factor that comes in sometime is that when the primary insured member reached the maximum age of renewability or if he/she dies, the whole policy gets closed and cannot be renewed even by the family members who are younger and who survive. They have to buy a fresh policy which they may or may not get. Also, once the children reach the ages of 21-25, they cannot be the part of family floater. They have to buy a new policy which they may or may not get. In case of any of the conditions above the family may be left uninsured for any risk arising out of hospitalization and getting insurance at a higher age may not be possible due to various health conditions that may have come up in that duration.

In the final analysis, a family floater health insurance is a convenient mini group policy, but in certain extreme cases might prove to be inadequate.

Sunday, October 3, 2010

How to File a Claim after Hospitalisation

The recent confusion & noise over withdrawal of cashless mediclaim in some hospitals has forced several policyholders to pay from their own pockets during hospitalization and subsequently file for a cliam.

While cashless is the most convenient feature, if one follows the necessary procedures as suggested by the insurance company, he/she can ensure that the reimbursement doesn’t turn out to be a tedious task.

While filing the claim for reimbursement, the following few points need to be kept in mind.

You need to collect all the bills, discharge summary, diagnostic reports, medical advice from the doctor pertaining to the post- period, and cash receipts upon discharge. The final & complete bill needs to be verified before signing the same. Any inflation in the bills would mean lower sum insured available for the rest of the year and it could also pose as a roadblock to claims processing.

All the original documents related to the treatment have to be submitted to the insurer, if claims processing is being done inhouse or to the designated TPA once you are out of the hospital.

Never wait for the TPA or the insurer’s claim processing cell to ask you for the documents once the claims process commences. It is advisable to submit all the documents in the beginning at one go. This will eventually help remove any delay in the claims processing.

Any costs that have been incurred 30 days pre or 60 days post hospitalization will also to be reimbursed by the insurer, so any documents pertaining to the same cause have also to be submitted.

You should also acquaint yourself with the exclusions and sub-limits in the policy while claiming a reimbursement to avoid surprises later.

Treatment of piles & cataract is not covered in the first year. Pregnancy is not covered in most of the individual mediclaim policies. Dental treatment and outpatient department expenses are also not covered in most of the policies. Any tonics, vitamins or equipment like a pacemaker or a wheel-chair, too, could be excluded by some insurers from the scope of coverage.

After submission of your documents, the TPA or the insurer’s claim processing cell reviews the same & arrives at a decision on settling the claim & the extent to which the claims can be reimbursed.

The insurer reimburses the amount within 21 days from the date of the submission of all the relevant documents. Intimation letter is sent to the policyholder in case of any queries or rejection of claims. Get info on handling claims and compare insurance policies.

IRDA bans Credit Default Insurance

Credit Insurance Plans have been put into a complete ban by IRDA as it was being practiced rampantly by some non-life insurers. Credit Insurance is a kind of cover or guarantee to the lender against payment default by borrowers. IRDA has ordered all general insurers to stop selling credit insurance plans until any further detailed notice is issued by them in this regard.

Since only a smallish number of loans carry credit risk protection, the decision is unlikely to increase the total credit risk of banks. The Authority has also asked for details of total exposure of the insurer under the credit insurance plans issued by them to the banks offering credit facility to the debtors. The credit insurance that is being marketed by the several insurers is better termed as credit default insurance. It’s basically a security cover which provides protection to the borrower of a loan against the inability to repay the loan.

A recent case of credit insurance cover which resulted in a claim is that of the state-owned insurer Oriental Insurance Company selling such a cover to Paramount Airlines. The insurer provided cover to the airline’s lenders from different branches to the tune of INR 200 crores. Several state-owned lenders have an exposure to the company, which along with other troubled airlines are trying to restructure it’s debt.

Recently, some scam also came into limelight wherein unscrupulous brokers were conniving with borrowers. The broker armed with a letter from a international reinsurer saying it is willing to provide reinsurance underwriting support, along with the borrower would approach an insurance company for credit insurance cover. Reinsurance support is similar to loan syndication where deep-pocketed underwriters share the credit risk. When there used to be a claim, the insurance company discovered there were problems with the technicalities in the contract which allowed the international reinsurer to escape liability and the local insurer was left with the claim.

When compared, credit insurance is quite similar to credit default swaps which earlier brought down the international insurer AIG. Get more info and also compare insurance quotes.