Your health plan just got better, but…
The new rules eliminate the claim-loading clause, aside from making other good changes. But don’t expect your insurer to turn friendly. Our take, along with solutions to likely problems.
Lack of regulation from Insurance Regulatory and Development Authority (IRDA) allowed insurers to insert several limitations within their policies. Want to make a claim? You’ll lose your no-claim bonus and risk paying a higher premium next year. You’re old and, therefore, likely to claim more often? We don’t want you as a client. But things have changed, as of October 1. The IRDA has finally decided to do away with some of the limiting factors of health insurance policies. Whether the insurers follow them is another matter altogether, though. Here are the major changes, what you’ll continue to watch out for and the solutions to problems that may crop up.
Free look period: It happens to all of us, doesn’t it? It’s easy to confuse agents with financial advisors, particularly because many of us purchase from friends, neighbours or relatives. The new rules provide a free look period of 15 days, but this only applies to individual policies. So if you’re buying any family plan or group plan, you still need to read the terms and conditions beforehand. It’s unfair that a distinction has been made, but don’t expect a change.
Remember: If you happen to find out that your plan isn’t as good as you thought it was, contact the insurer immediately for an almost full refund.
Minimum entry age: The new rules make clear that no one under the age of 65 years is to be denied cover. Will insurers follow this? It’s very unlikely. Managers at insurance companies have already said that it’s very unlikely that anyone with a poor claim history will be insured just because he/she is not yet 65 years old. If you were hoping it meant that there was absolutely no chance you could be refused until you turned 65, read on.
Remember: The new regulation is likely to be useless. What you should do instead is try making yourself a part of a family plan with your children or open an account at a public sector bank that offers a group insurance plan. The latter is a better option. Details here.
Lifelong cover: As per the new rules, policyholders should be provided cover for their entire life. While a few insurers have been offering this, the ones that aren’t are still against this change. Currently, most plans allow renewal only until you’re between 70 and 80 years old. While IRDA now makes it compulsory for plans to offer lifelong renewability, they are petitioning for a revision.
Remember: If insurers do manage to get the revision, you don’t want to be without cover when you’re in your 70s. In this case, it makes sense to invest in a critical illness plan. With these plans, if you contract a terminal illness, you get a lump sum from the insurance company. Premiums are relatively low and the sum assured can go up to Rs20 lakh.
No claim-loading: It should never have been allowed, but the claim-loading clause has only just been disallowed. The clause basically allowed insurers to significantly raise premiums of all those policyholders who made claims in the previous year. With the new rule, insurers can’t increase premiums no matter how often you’ve made a claim. Increases will instead be based on the total claim experience of the insurer.
Remember: With the new rule, insurers have to keep premiums stable for the first three years. From then on, premiums can rise, but only if there’s good reason. The change can’t be simply because you’ve made a couple of claims in the previous year. No-claim bonuses will continue.
Non-allopathic treatment: If you get non-allopathic treatment, you need to be careful about where you seek treatment now. While the rules once said that insurance companies would need to pay up if treatment was received at any suitable facility, this has now been changed to institutions recognised by it or accredited by quality council of India/National Accreditation Board on Health.
Remember: Before seeking treatment, find out if the facility has the necessary accreditation. Contact the insurer, too, to avoid confusion.