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Low-cost medical insurance

Low-cost medical insurance

Don’t let the high cost of medical insurance premiums be a hindrance. Several banks offer this insurance for you and your family. However, know if the policies offered suit you.

The cost of medical expenditure is high, and to go along with it even the cost of having medical insurance can be steep. Premiums can be high but they don’t have to. You can opt for a medical insurance cover from a bank and you can include your family too.

Many public sector banks – including Andhra Bank, Bank of Baroda, Bank Of India, Corporation Bank, Indian Bank, OBC and Punjab National Bank – offer a cheaper alternative to private and public sector insurance companies. The banks themselves have tie-ups with insurance companies such as National Insurance, New India Assurance, Oriental Insurance and United India Insurance.

The policies are similar to group medical covers and family floater schemes. Premiums are typically low, entry age is extended and by and large they include fewer or no medical check-ups when taking out the policy.

In general, these policies cover individuals up to the age of 79 or 80 years. However, with most banks you can’t apply for a new policy beyond the age of 60-65 years – these policies can only be renewed after that age up to 79 or 80 years, and there is often loading of the premium beyond 60-65 years. However, some banks grant new policies up to the age of 79 or 80 years. This makes them a good option for elders who don’t have medical insurance.

Most of the banks offer policies in which the sum insured is between Rs1 lakh and Rs5 lakh, but some banks even have this cover up to Rs10 lakh, while some offer sums as low as Rs50,000.

An advantage is that such policies are cheap. Oriental Bank of Commerce, for example, charges Rs6,830 as premium (including tax) for an sum of Rs5 lakh. Bank of Baroda on the other hand has two premium amounts depending on age. For an assured sum of Rs5 lakh, the premium for those up to 65 years of age is Rs7,079 while for those above 65 and up to 80 years it is Rs8,848.

And while some banks charge a standard rate for all age groups, some charge premiums based on age group. Corporation Bank, for instance, fixes the premium based on the age group of the senior most member of your family covered.

Another benefit is that these policies too allow you to avail tax-saving benefits under section 80D of the Income-Tax Act.

There are disadvantages of having such policies, too. The most obvious is that since you’ll be getting insurance cover through the bank and not directly from it, the bank’s job ends at selling you the policy. Also, claims might require more forceful follow-ups and may need to be monitored more closely since the policies are administered by a third party.

Additionally, you will need to have an account with the banks in order to get a medical policy with them. Also, certain pre-existing conditions may not be covered and for some there is an exclusion for a certain period. Premium loading about the age of 60-65 could also be seen as a negative factor. For example, Bank of India allows renewals beyond 65 years of age up to the age of 80 years with a 25% premium loading.

When it comes down to it, you should consider your options to see if such a policy suits you best according to your needs. And as always, you should read the contract carefully for things like exclusions before taking any policy.

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