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Health is wealth

Insurance companies are coming out with a plethora of unit-linked health insurance products, reports Sanjeev Sinha.

business Updated: Mar 07, 2008 00:07 IST
Sanjeev Sinha

It seems to be raining health and wealth for Indian consumers, in insurance at least. Within two weeks of LIC checking into health insurance with its Health Plus plan, Reliance Life unveiled its Wealth+Health policy followed by Tata AIG Life’s Health Investor. Thus, while it used to be either health or wealth earlier, now a combination of both is on offer—with the number of such plans set to rise in future.

P Nandagopal, CEO, Reliance Life Insurance, explains: “Wealth and health are not opposite goals, but two sides of the same lifestyle a person in a modern society aspires to achieve.”

Often, there is an inverse relationship between wealth and health. For instance, when one gets stressed out in the wealth accumulation rat race, one forgets about one’s health. Similarly, any deterioration in health causes significant erosion of accumulated savings because of rising healthcare expenses. “Therefore, if there’s one plan that helps take care of both these goals, it makes immense practical sense from convenience, tax efficiency and cost effectiveness points of view,” he says.

What are these plans?

LIC's Health Plus combines health insurance covers for the entire family, a hospital cash benefit (daily allowance between Rs 250 and Rs 2,500) and a major surgical benefit (up to 200 times of daily allowance) along with a Ulip component specifically designed to meet the domiciliary treatment expenses for insured members. Being a unit-linked plan, fund value is payable at the end of the term. Reliance Wealth+Health is also a unit-linked health plan that offers the convenience of cashless payments, cover for the entire family and the option to increase life cover to provide additional security. It offers hospitalisation and surgical benefits and also covers critical illnesses. The maturity benefit is payable on survival of the principal insured. Tata AIG's Health Investor, on the other hand, is a critical illness cover with return of premium. It provides cover against 12 critical illnesses and surgeries, and pays out a lump sum amount on the first diagnosis of a critical illness or first performance of any surgeries for a critical Illness. It also guarantees 100 per cent return of premium in case of no claim.

The pros and cons

One of the main advantages of these plans is that unlike a pure health cover, there is some value that goes back to the policyholder on maturity. Thus, people who hesitate to invest in a health insurance policy because they are not assured of getting back their invested premium at maturity may find some value in such plans. Also, each plan has individual advantages too. For instance, in the case of Reliance Wealth + Health, there are 52 free switches allowed during any policy year, while 48 surgeries are covered under LIC’s Health Plus as against 33 surgeries under Wealth + Health. But then getting surgery cover under Health Plus may prove expensive as they are covered under the base plan itself as against being offered under the rider option in case of Wealth + Health.

On the flip side, these plans may cost you more than a plain mediclaim polic, because in their case either the fund value or return of premium is assured, which doesn't come free of charge. Experts, therefore, advise people to first buy a simple mediclaim policy as a primary cover and then go for an extra benefit plan.