6 important changes brought about by new medical insurance plans

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Medical Insurance
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6 important changes brought about by new medical
insurance plans   Regulations play an important
role in defining the growth and future of any
industry. Recently, the Insurance Regulatory and
Development Authority of India (IRDAI) introduced
(Health Insurance) Regulations, 2016, replacing
the rules set in 2013.
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The six important changes brought about by the
regulations are Combi plans can be a mix of
any life (earlier only term plan) and medical
insurance plans Cumulative bonus in benefit
plans allowed Wellness benefits Insurers
have been asked to launch pilot products
Standard declarations format can be flexible and
insurers may design them independently Life
insurers will not be allowed to offer
indemnity-based products
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Let's take a look at the implications of each of
them Combi plans can be a mix of any life
(earlier only term plan) and health plan In
December 2009, IRDAI had come out with the
guidelines for combi plans that would allow a
life and a non-life (or a standalone health)
insurer to enter into an agreement to offer such
plans. Recently, India First Life Insurance
announced collaboration with Star Medical
insurance plansto introduce Star First Combi
Plans - a combination of health and life
insurance plans. It was a mix of a pure term ..
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Cumulative bonus in benefit plans allowed
Currently, cumulative bonus is not a feature in
defined benefit policies such as critical illness
plans. Going forward, it will be offered and
explicitly stated in the prospectus and policy
document. The addition of cumulative bonus
increases the sum insured over a period of time
and helps in meeting a higher treatment expense
in future. But, will there be a corresponding
increase in the premium of critical illness
plans?
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Wellness benefits Medical insurance plans
premium is largely a function of age and sum
insured, followed by health maintenance and
healthy habits. The guidelines to reward
policyholders with an early entry and continued
renewals were already present in the IRDAI
guidelines of 2013. To incentivize healthy lives,
the recent guidelines stress on rewarding
policyholders on the basis of preventive and
wellness habits by disclosing upfront such
mechanism or incentives in the prospectus and the
policy document. "This type of benefit might help
customers in monitoring and improving their
health. On the other hand, the insurer recognizes
the same and offers discount on the renewal
premium," says Mehrotra.
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No discount, however, will be provided on any
third-party service or merchandise. For instance,
insurers can't offer discounts on a health club's
membership just because they have a tie-up with
the club. Instead, discounts in premium or on
diagnostic or pharmaceuticals or consultation
services of providers in the network will still
be allowed.
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Insurers have been asked to launch pilot products
This new initiative may usher in a new wave in
the insurance industry. IRDAI has allowed
insurers to test the water by launching 'pilot
products'. Close-ended with a one-year policy
term, the products will be offered only by
general or health insurers for just five years
initially. The product can be withdrawn or rolled
over into a regular one. The idea is to cover
risks which have not been covered by insurers
till now.
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Such experiments, however, should not be
detrimental to the interests of policyholders.
Mehrotra says, "While the insurers have the
flexibility to withdraw or continue the product
after 5 years, the regulator has protected the
interest of the customers by putting an
obligation on the insurance companies to port the
customers of pilot policies to an existing
product of a health insurer. This will provide
customers continuity benefit and at the same time
encourage insurers to innovate more and test new
products."
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Proposal form can be flexible and insurers may
design them independently All insurance
companies, including life, general and health,
can now have their own proposal form with
separate set of standard declarations as part of
it. The regulations, however, strictly prohibit
any explicit or implicit consent of prospective
buyers to part information with third-parties.
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Life insurers are not allowed to offer
indemnity-based products From now on, life
insurers will not be allowed to offer indemnity
products. For existing policyholders, however,
the policy shall continue until the expiry of the
respective policy term. But won't their claim
experience be hit if new policies can't be sold?
"Actuarial assumptions take into account several
factors, including continuity of a product and
the volume of business. As a prudent insurance
company.
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Indemnity plans are medical insurance plans
policies such as medi claim which reimburse the
actual hospital expense incurred, i.e., indemnify
the policyholder. Few years back, life insurers
had started offering such plans, but now IRDAI
has put brakes to it. Non-life and standalone
health insurers will, however, continue to offer
them. Importantly, life insurers may still offer
defined-benefit health plans such as critical
illness plans in which a lump sum amount,
irrespective of the actual hospital expect ..
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Conclusion One should ideally have adequate
medical insurance cover for not just oneself, but
the entire family as well. Young families may opt
for family floater health covers where children
up to the age of 25 are covered. At around age
40, one may consider buying a critical illness
cover. Keep reviewing the amount of coverage
every 3-5 years and, more importantly, maintain a
healthy lifestyle. Source http//economictimes.
indiatimes.com/wealth/insure/6-important-changes-b
rought-about-by-new-health-insurance-rules/article
show/53735274.cms
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