How has health insurance changed over time? When should you go to for riders??
Insurance
is now being offered for what is called the ABCD illnesses. Depending
on the stage or depending on how serious the disease is, they are
offering day one cover, which basically means that right after you buy
the policy, a certain kind of coverage kicks in and then maybe after 30
days, more coverage kicks in against having a waiting period of three or
four years, says Sarbvir Singh, Joint Group CEO, Policybazaar.com.
Singh
points out that some of these products will be a little more expensive
as compared to a basic product which has a longer waiting period, but it
offers the person a choice We are seeing health
insurance companies trying to do a revamp. It includes a lock-in
premium, high no claim bonuses, elaborate coverage and for senior
citizens, even treatment for critical illnesses like cancer abroad. All
of this is now being introduced. What
could be the reason behind these kinds of revamped features? Is this
the demand or innovation part where health insurance companies seem to
be focussing? There are a couple of points. We believe that the
health insurance product in India is actually a very good product, even
today thanks to the kind of coverage that is offered. Despite that, the
penetration of retail health insurance in India is still very low. All
companies are trying to find ways around the objections that people might have and to give them greater attractiveness for buying health insurance
One
of the points that a lot of consumers have is that if I do not make a
claim, then what happens to the sum insured that I have? Now, many
products allow you to carry that forward and it can add up to seven to
ten times where you started from. There are products which are giving
you a no claims bonus; even if you have to make a claim, they still
restore a large portion of the sum insured for you. There are products,
which are offering global coverage.
Typically, what used to be a four-year waiting period has been reduced now. So, slowly but surely, health insurance companies are coming out with very innovative products which are addressing each of the reasons why a consumer may not buy health insurance.
You just mentioned waiting periods. Diabetes used to be a point of elimination for a lot of people when they were buying health insurance for themselves. It is no longer the case. What has been the shift over here? Insurance is now being offered for what we call the ABCD illnesses. Depending on the stage or depending on how serious the disease is, they are actually offering what they call day one cover, which basically means that right after you buy the policy, a certain
This is against having a waiting period of three or four years. Some of these products will be a little more expensive as compared to a basic product which has a longer waiting period, but it offers the person a choice where if you are concerned about the fact that because you are already suffering from one of these diseases, you are able to still get coverage as soon as you need it. I think this is a very innovative solution that the insurance companies have created where people with illnesses are actually being allowed to be covered as soon as the first day. This includes diabetes as well.
In terms of places from where we are seeing these kinds of interests coming in, as an online portal, can you give us some data as to which parts of the countries now are participating more into getting themselves insured when it comes to health insurance policy? A lot of people in India buy insurance policies, be it life or health, for tax benefit which seems to be changed now because of the new tax regime, there would not be any benefit on these insurance policies. What is the change in narrative in terms of buying health insurance?
We see that consumers have moved on from the tax narrative, especially for protection policies. So, for health insurance and term insurance, the tax narrative is a useful secondary thing, but primarily people understand that they need to protect themselves.
In health insurance, one of the things we have seen is that while five years ago, almost 60 or two-thirds of our sales were coming from bigger cities or tier I cities today that situation has completely reversed. Today, about two-thirds of our sales or 60% of our sales are coming from the smaller cities and the remaining is coming from the bigger cities. That has happened for a couple of reasons. One is Covid, because people understood the need for health insurance when Covid happened and secondly, there is a much greater awareness that health liabilities can come up and even people living in smaller cities now understand the value of health insurance.
Thirdly, the insurance companies have done a great job of increasing the number of cashless hospitals where this insurance can be used and that gives confidence to the customer. When you see the names of hospitals around you, that gives you confidence and these three things put together have led to this change in buying behavior.
Coming to senior citizen plans, can you help us understand how the entire narrative has changed. In terms of coverage, we have seen a lot of changes when it comes to senior citizens and their pre-existing illnesses especially.Senior citizens now have a wide choice of plans. On one end are the premium plans which provide day one coverage for many named diseases. They provide a concierge service. Insurance companies have now moved beyond just hospitalisation and treating people when they are in a hospital, but they also provide preventive care. They provide disease management programmes, consultation, OPD consultation with doctors, nutrition support and even exercise support.
So, what is happening is that for senior citizens, on one hand, there are these very premium plans with first day coverage and very good support services so that if you ever need to go to hospital, disease management. On the other hand, we have the more traditional plans which plans which have a copay, a higher waiting period, but then they are much more affordable.
So, senior citizens now have a range of options to choose from ranging from very easily usable plans to maybe more economical plans which provide coverage.
What are the importance of riders? Having a comprehensive policy is fine. Just have a base health insurance policy with you and then later on for further coverage, you can add a lot of top ups and riders. How can one design own health insurance policy with all important riders?I would suggest that customers need to keep it a bit simple because otherwise it is easy to get lost in the jargon and in the whole thing. The main thing is to first have a sensible base plan which provides you an appropriate level of coverage for the amount of money that you are comfortable with and then depending on your situation, you can add certain additional benefits.
These could be in the form of reduced waiting periods, these could be in the form of some of these disease management programmes in the form of OPD consultations or others. But I would again reiterate that the first thing that a customer should do is to get a good base policy and then on top of it, depending on the situation, add riders. I would always suggest that you should consult an insurance expert, a person who can advise you very well on these things.
What would you suggest the existing policyholders do? Should they just give up on the old ones or get an update on the existing insurance policy to have the benefit of these features?
I would suggest that they should first look at their existing policy. What we have found is that many times consumers do not know the full benefits that they have in their own policies. Policies are quite powerful and one should understand the policy better
Secondly, what you will find is that many policies, even though they may be the same for the last few years, have added benefits as they went along. So, it is important to understand those.
Thirdly, I would suggest after having done the first two steps, if there is anything that is lacking in your policy and that is something that you would like, then you can go in for a rider. Many companies offer riders which can be attached to existing policies and, of course, if it turns out that after all this, that policy is not suitable, then of course they should consider looking at some of these new age products and porting to them.