Health Insurance Products

Chapter 19
Health Insurance Products
1
Learning Outcomes
ver. 1 – w.e.f. Aug. 16

Strictly for internal circulation only. Should not be further circulated/ used for presentation to a prospect/ general public
Learning Outcomes
ver. 1 – w.e.f. Aug. 16

How it differentiated from IC 33 ?
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Why Health Insurance ?
• Providing financial assistance to pay for medical facilities in case of

any illness
• Preserving the savings of an individual which may otherwise be wiped
out due to illness
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Classification of Health Insurance Products
• Indemnity Covers – Pay for actual medical expenses

incurred due to hospitalization
• Fixed Benefit covers – Pay for a fixed sum per day for the
period of hospitalization
• Critical illness Covers– Fixed benefit plan for pay-out on
occurrence of pre-defined critical illness
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Classification based on customer segment
• Individual Cover – Offered to retail customers and their

families
• Group Cover– Offered to corporate clients, covering
employees and group, covering their members
• Mass policies– For Government schemes like RSBY
covering very poor sections
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Learning Outcomes
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IRDA guidelines on Standardization in health
insurance
Based on common understanding, IRDA issued guidelines on

standardization in Health Insurance in 2013
The guidelines now provide for standardization of :
• Definitions of commonly used insurance terms
• Definitions of critical illness
• List of excluded items of expenses in hospitalization indemnity
policies
• Claim form and pre authorization form
• Billing formats
• Discharge summary of Hospitals
• Standard contract between TPAs, insurer and hospitals
• Standard file and use format for getting IRDAI for new policies
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Learning Outcomes
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Hospitalization indemnity Product
• An indemnity based health insurance policy

(Medicaid)
• Mediclaim continues to be the largest selling
health insurance in the country
• Hospitalization indemnity products protect
individuals from the expenditure they may
need to incur in the event of hospitalisation
due to illness / accident. In most of the cases,
they also cover a specific number of days
before and after hospitalisation, but exclude
any expenses not involving hospitalisation20
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Hospitalization indemnity Product – Expense
covered
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Hospitalization indemnity Product – Expense
covered
Note – A regular hospitalization indemnity policy covers expenses only if the duration
of stay in hospital is for 24 hours or more (exception – day care procedures) are
covered
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Pre & Post hospitalization expenses
Pre hospitalization expenses:

• IRDA Health Insurance Standardization guidelines define Pre-
hospital expenses as “Medical expenses incurred immediately
before the insured person is hospitalized, provided that such
Medical Expenses are incurred for the same condition for
which the Insured Person's Hospitalization was required, and
the In-patient Hospitalization claim for such Hospitalization is
admissible by the Insurance Company” eg tests, medicines,
doctors fees etc
• Hospitalization could be either emergency hospitalization or
planned
• If planned surgery, there would be expenses incurred by him
prior to the hospitalization
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Post hospitalization expenses
• Definition – Medical Expenses incurred immediately after the Insured

Person is discharged from hospital, provided that such Medical Expenses
are incurred for the same condition for which the Insured Person's
Hospitalization was required, and the In-patient Hospitalization claim for
such Hospitalization is admissible by the Insurance Company.
• Such expenses have to be related to the treatment taken in the hospital &
are covered under the health policies such as expenses for medicines,
drugs, review by doctors etc after discharge from hospital
• Though the duration of cover for pre and post hospitalization expenses
would vary from insurer to insurer & is defined in the policy, the most
common cover is for 30 days pre and 60 days post hospitalization
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Domiciliary Hospitalization
• An individual health policy also has a provision to take care of expenses

incurred for medical treatment taken at home without being admitted to a
hospital for 3 to 5 days
• However, the condition is that though the illness requires attention at a
hospital, the condition of the patient is such that he cannot be moved to a
hospital or there is lack of accommodation in hospitals
• Exclusion – Certain chronic or common ailments such as Asthma,
Bronchitis, Chronic Nephritis and Nephritic Syndrome, Diarrhoea
and all type of Dysenteries including Gastroenteritis, Diabetes
Mellitus, Epilepsy, Hypertension, Influenza, Cough and Cold,
Fevers.
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Hospitalization indemnity Product – Common
exclusions
• Pre-existing diseases – Defined as “Any condition, ailment or injury or

related condition(s) for which you had signs or symptoms, and/or were
diagnosed, and/or received medical advice/treatment within 48 months
prior to the first policy issued by the insurer.”
• Weight control programs/ supplies/ services
• Cost of spectacles/ contact lenses/ hearing aids etc.
• Dental treatment expenses that do not require hospitalisation
• Hormone replacement
• Home visit charges
• Infertility/ subfertility/ assisted conception procedure
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Hospitalization indemnity Product-Common
exclusions
• Obesity (including morbid obesity) treatment

• Psychiatric & psychosomatic disorders
• Corrective surgery for refractive error
• Treatment of sexually transmitted diseases
• Donor screening charges
• Admission/registration charges
• Hospitalisation for evaluation/ diagnostic purpose
• Expenses for investigation/ treatment irrelevant to the disease for which
admitted or diagnosed
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Hospitalization indemnity Product – Common
exclusions
• Any expenses when the patient is diagnosed with retro virus and/or
suffering from HIV/ AIDS etc. is detected directly or indirectly
• Stem cell implantation/ surgery and storage
• War and nuclear related causes
• All non-medical items such as registration charges, admission
fees, telephone, television charges, toiletries, etc.
• A waiting period of 30 days from inception of policy is normally
applicable in most policies for making any claim. This however will not
be applied for hospitalization due to an accident.
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Hospitalization indemnity Product – Coverage
Option
Individual Coverage
Family Floater
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Option
• Individual Coverage: An individual insured can cover

himself along with family members such as spouse,
dependent children, dependent parents, dependent parents in
law, dependent siblings etc
• It cover each of such dependent insured under a single policy with a
separate sum insured chosen for each insured person
• Premium will be charged for each individual insured according to
his age and sum insured chosen and any other rating factor
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Option
• Family Floater: It covers the family consisting of spouse,

dependent children and dependent parents are offered a
single sum insured which floats over the entire family
• Premium will normally be charged based on the age of the
oldest member of the family proposed for insurance
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Hospitalization indemnity Product – Special
features
• Not all products carry all the below mentioned features, and
they may vary from insurer to insurer and product to product.
• Sub limits and Disease specific capping
• Co-payment (popularly called Co-pay)
• Deductible
• New exclusions have been introduced and later standardized by IRDAI
• Zone wise premium
• Coverage of pre-existing diseases
• Renewability
• Coverage for Day care procedure
• Cost of pre policy check up
• Duration of pre and post hospital cover
• Add on covers
• Value added covers
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Learning Outcomes
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Top-up covers or high deductible insurance
plans
• This policy works along with a basic health cover having a

low sum insured and comes at a comparatively reasonable
premium.
• These covers are available on individual basis and family
basis
• Ex: An individual is covered for a sum insured of Rs. 3 lakh by his
employer. He could opt for a top-up policy of Rs. 10 lakh in excess
of Rs. 3 lakh. If the cost of a single hospitalization is Rs. 5 lakh, the
basic policy would cover up to Rs. 3 lakh only. With the top-up
cover, the balance sum of Rs. 2 lakh would be paid out by the top-
up policy
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Learning Outcomes
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Senior citizen Policy
• These plans are designed to offer cover to elderly people who

often were denied coverage after certain age (e.g. people over 60
years of age)
• IRDAI has mandated special provisions for insured persons who
are Senior Citizens:
• The premium charged for health insurance products offered to senior
citizens shall be fair, justified, transparent & duly disclosed upfront.
• The insured shall be informed in writing of any underwriting loading
charged over & above the premium & the specific consent of the
policyholder for such loadings shall be obtained before issuance of a
policy.
• All health insurers and TPAs shall establish a separate channel to address
the health insurance related claims & grievances of senior citizens.
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Fixed Benefit Cover-Hospital cash, critical
illness
• Hospital Daily Cash policy – Per day amount limit, number of payment
days, Standalone cover or add-on cover, Supplementary cover, Other
advantages of the cover
• Critical illness policy – This product is also known as the dreaded
disease cover or a trauma care cover with a provision to pay a lump sum
amount on diagnosis of certain named critical illness.
• Critical illness policies are usually available for persons in the age group
of 21 years to 65 years
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The critical illnesses covered vary across
insurers and products, but the common ones
include
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Long term care insurance
• There are 2 types of plans for long term care
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Bhavishya Arogya policy – Key features
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Combo products
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Package products
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Micro insurance and health insurance for
poorer sections
• IRDA (Micro-Insurance) Regulations 2005

• Insurance to Low Income Groups & informal sector
• Life Cover: Below Rs. 30,000
• Life insurer may offer life micro-insurance as well as
general micro-insurance products.
Ex: Jan Arogya Bima Policy
Universal Health Insurance Scheme (UHIS)
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Jan Arogya Bima Policy
• This policy is designed to provide cheap medical insurance

to poorer sections of the society
• The coverage is along the lines of the individual Mediclaim
policy. Cumulative bonus and medical check-up benefits are
not included
• The policy is available to individuals and family members
• The age limit is 5 to 70 years
• Children between the age of 3 months and 5 years
can be covered provided one or both parents are
covered concurrently
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Jan Arogya Bima Policy
• The sum insured per insured person is restricted to Rs.5,000

and the premium payable as per the following table:
Up to 46
Age of the person insured 46-55 56-65 66-70
years
Head of the family 70 100 120 140

Spouse 70 100 120 140
Dependent child up to 25 years 50 50 50 50
For family of 2+1 dependent child 190 250 290 330
For family of 2+2 dependent children 240 300 340 380
• Premium qualifies for tax benefit under Section 80D of the

Income Tax Act
• Service tax is not applicable to the policy
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Universal Health Insurance Scheme (UHIS)
• This policy is available to groups of 100 or more families. In

recent times even individual UHIS Policies were made
available to the public
• Benefits:
• Medical reimbursement – up to Rs.30,000 to an individual / family
• Personal accident cover – Rs 25,000
• Disability cover – Rs 50 per day will be paid due to hospitalization
up to a max of 15 days after a waiting period of 3 days
• Premium Entity Premium (p.a)
For an individual Rs 365
For a Family(up to 5 member includes children) Rs 548
For a Family (up to 7 member including
dependent parent & first 3 children) Rs 730
Premium subsidy for BPL family Govt will provide it BPL
ver. 1 – w.e.f. Aug. 16

Rashtriya Swasthya Bima Yojana (RSBY)
• RSBY has been launched by the Ministry of Labour and

Employment, Government of India, to provide health
insurance coverage for the below poverty line (BPL) families.
• Features:
• Total sum insured of Rs. 30,000 per BPL family on a family
floater basis
• Pre-existing diseases to be covered
• Coverage of health services related to hospitalization & services
of surgical nature which can be provided on a day-care basis
• Cashless coverage of all eligible health services
• Provision of smart card
• Provision of pre & post hospitalization expenses
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• Transport allowance of Rs.100/- per visit

• The Central & State Government pays the premium to the insurer
• Insurers are selected by the State Government on the basis of a
competitive bidding
• Choice to the beneficiary between public & private hospitals
• Premium to be borne by the Central and State governments in the
proportion of 3:1. Central Government to contribute a maximum
amount of Rs. 565/- per family
• Contribution by the State Governments: 25% of the annual premium
and any additional premium beyond Rs 750
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• Beneficiary to pay Rs. 30/- per annum as registration fee/ renewal

fee.
• Administrative cost to be borne by the State Government
• Cost of smart card additional amount of Rs. 60/- per beneficiary
would be available for this purpose
• The scheme shall commence operation from the first of the month
after the next month from the date of issue of smart card
• The scheme will last for one year till 31st March of next year. This
would be the terminal date of the scheme in that particular district
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Pradhan Mantri Suraksha Bima Yojana
• It is a personal accident death and disability

What is it?
cover insurance
• All savings bank account holders in the age 18
Who are all eligible? to 70 years in participating banks are entitled
to join
• Approved non-life insurer who will offer a
Who is the insurer?
Master Policy to such bank for the cover
What is the primary

• Aadhar
KYC in this scheme?
What is the term of the • The cover shall be for the one year period
policy? from 1st June to 31st May
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Pradhan Mantri Suraksha Bima Yojana
• Joining and Nomination facility is available by

Nomination
SMS, email or personal visit
Premium • Rs 12/ p.a.
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Pradhan Mantri Jan Dhan Yojana
• Aimed at including maximum number of people in the

banking mainstream
• Launched by Govt of India on 28th August 2014
• It is a ZERO balance Ac, However, if the account-holder
wishes to get cheque book, he/she will have to fulfil
minimum balance criteria
• As on 13th May 2015, a record 15.59 Crore accounts have
been opened with a balance in account of Rs. 16,918.91
Crores. Of these, 8.50 Crore accounts have been opened with
zero balance
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• Special Benefits under PMJDY Scheme
• Interest on deposit
• Accidental insurance cover of Rs.1.00 lac
• No minimum balance required
• Life insurance cover of Rs.30,000/-
• Easy Transfer of money across India
• Beneficiaries of Government Schemes will get Direct Benefit
Transfer in these accounts
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• After satisfactory operation of the account for 6 months, an

overdraft facility will be permitted
• Access to Pension, insurance products.
• Accidental Insurance Cover
• RuPay Debit Card which must be used at least once in 45 days.
• Overdraft facility upto Rs.5000/- is available in only one account
per household, preferably lady of the household
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Personal Accident and disability cover
• It provide compensation due to death and disability in the

event of unforeseen accident
• It also provide some form of medical cover along with the
accident benefit
• In case of death 100% SA will be paid to the family
• In case of disability, compensation varies from a fixed
percentage of the sum insured in the case of permanent
disability to weekly compensation for temporary
disablement
• PA policies are offered to individuals, family and also to
groups
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Types of disability cover- 3 Types
Permanent total disability (PTD) – means becoming totally

disabled for lifetime
Permanent partial disability (PPD) – Ex loss of fingers, toes, etc
Temporary total disability (TTD) – Covers the loss of income
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Overseas travel insurance
• An individual is exposed to the risk of accident, injury and

sickness during his stay overseas
• Scope of coverage – Primarily meant for accident and
sickness benefits but some plans can also cover
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Overseas travel insurance
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Group health cover
• Group policy is taken by a group owner who could be an

employer, an association, a bank's credit card division,
where a single policy covers the entire group of individuals.
• Term is just 1 year only
• There are two types:
• Group Health Cover
• Corporate buffer/ Floater
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Features of group policies- Hospitalisation
benefit covers
Covered Pre-
Offered by Based on Regulatory
from the existing
Covering some age, profile provisions
age of 3 disease
employees insurers of the strictly
months exclusion,
and their under group prohibit
only in 30 days
families Covers to individual members, formation
individual waiting
including suit the policies, the size of of groups
health period, 2
dependent requiremen but with a the group primarily
policies. In years
spouse, t of the waiting & most for the
group waiting
children & group period of 2- importantly purpose of
policies, period,
parents / 3 Year & 9 the claims taking out a
coverage is congenital
parents in month in experience group
given to diseases
law group of the insurance
babies from may be
policy group cover
Day 1 covered
ver. 1 – w.e.f. Aug. 16

Features of group policies- Hospitalisation
benefit covers
Dental
It could be
care, vision
There is either
care, cost
provision totally paid
of health
for by the
check-up &
discount on employer/g
sometimes,
premium roup
critical
based on owner, but
illness
size of the it is usually
cover too
group as on a
@
also the contributio
additional
claims n basis by
premiums
experience the
as
of the employees/
complimen
group group
tary
members
benefits
ver. 1 – w.e.f. Aug. 16

Corporate buffer/ Floater
• Buffer cover would have a sum insured varying from Rs. 10

lakh to a crore or more.
• Amounts are drawn from the buffer, once a family's sum
insured is exhausted. However this utilization is usually
restricted to major illness / critical illness expenses where a
single hospitalization exhausts the sum insured.
• The amount that could be utilized by each member from this
buffer is also capped, often up to the original sum insured
ver. 1 – w.e.f. Aug. 16

Special Products
ver. 1 – w.e.f. Aug. 16

Key terms in health policies
Independent
It is an
It refers to a This service organizations Person who
institution
hospital/ enables the for managing holds a valid
established for
nursing home/ An insurer has insured to health registration
in-patient care
day care the option to avail of the insurance from the
& day care
centre which create a treatment up claims medical
treatment of
is under tie-up preferred to the limit of introduced & council of any
sickness &/ or
with an network of cover without licenced by state of India
injuries &
insurer/ TPA hospitals to any payment IRDAI in year & is thereby
which has
for providing ensure quality to the network 2001. They entitled to
been
cashless treatment and hospitals by provides an practice
registered as a
treatment to at best rates. producing his identity card, medicine
hospital with
insured medical card cash less within its
the local
patients as a proof service & jurisdiction
authorities
process claims
ver. 1 – w.e.f. Aug. 16

IRDA
Reasonable
guidelines It is provided
charges are
stipulate that
the charges It is available every claim
claim
for services or in Individual free year. SA
Qualified intimation/ Some insurer
supplies, health policy/ gets increased
nurse means a paper offer discount
which are reimbursemen on renewal by
person who submission on premium
standard t of the cost of a fixed
holds a valid beyond for every
charges for health check- percentage
registration stipulated claim free
the specific up at the end say 5%
from the time (15 days) year instead of
provider, of 4 annually & is
Nursing should be a bonus on
taking into continuous, allowed up to
Council considered sum insured.
account the claim free a max of 50%
only if there is policy periods for 10 claim-
nature of the
a justifiable free renewals.
illness/ injury
reason for the
involved
same
ver. 1 – w.e.f. Aug. 16

In this concept Got

Insurer place a It is an
insured The IRDA standardized
restriction on consumer-
bearing a It is the fixed guidelines on by regulatory
the category friendly
portion of amount of renewability provisions &
of room that provision,
each & every money the of health an Insurance
an insured where he can
claim under a insured is insurance company may
chooses by withdraw
health policy. required to policies at any time
linking it to from the
These could pay initially makes lifetime cancel the
the SA, like contract
be before the guaranteed policy only on
per day room within 15 days
compulsory or claim is paid renewal of the grounds of
rent based on of receiving
voluntary by insurer health policies misrepresentat
certain % of the policy
depending on compulsory ion, fraud, etc
SA document
the product. by the insured
ver. 1 – w.e.f. Aug. 16

Summary
• A health insurance policy provides financial protection to the insured

person in the event of an unforeseen & sudden accident / illness leading to
hospitalization
• Health insurance products can be classified on the basis of number of
people covered under the policy: individual policy, family floater policy,
group policy
• A hospitalization expenses policy or Mediclaim reimburses the cost of
hospitalization expenses incurred on account of illness / accident
• Pre hospitalization expenses would be relevant medical expenses incurred
during period up to the defined number of days (generally 30 days) prior to
hospitalization & will be considered as part of claim
• Post hospitalization expenses would be relevant medical expenses incurred
during period up to the defined number of days (generally 60 days) after
hospitalization & will be considered as part of claim
ver. 1 – w.e.f. Aug. 16

Summary
• In a family floater policy, the family consisting of spouse, dependent

children and dependent parents are offered a single sum insured which
floats over the entire family
• A hospital daily cash policy provides a fixed sum to the insured person for
each day of hospitalization
• Critical illness policy is a benefit policy with a provision to pay a lump
sum amount on diagnosis of certain named critical illness
• High Deductible or Top-up Covers offer cover for higher sum insured over
and above a specified chosen amount (called threshold or deductible)
• The fixed benefits cover provides adequate cover to the insured person and
also helps the insurer to effectively price his policy
• A Personal Accident (PA) Cover provides compensation in the form of
death and disability benefits due to unforeseen accidents
ver. 1 – w.e.f. Aug. 16

Summary
• Out-patient covers provide for medical expenses like dental treatments,

vision care expenses, routine medical examinations and tests etc. that do
not require hospitalization
• A group policy is taken by a group owner who could be an employer, an
association, a bank's credit card division, where a single policy covers the
entire group of individuals
• Corporate Floater or Buffer Cover amount helps meet excess expenses over
and above the family sum insured
• Overseas Mediclaim / Travel Policies provide cover to an individual
against exposure to the risk of accident, injury & sickness during his stay
overseas
• Corporate Frequent Travellers Plan is an annual policy whereby a
corporate takes individual policies for its executives who frequently make
trips outside India
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Recap
• Which of the below statement is correct with regards to a

hospitalization expenses policy
• Only hospitalization expenses are covered
• Hospitalization as well as pre and post hospitalization expenses are covered
and a lumpsum amount is paid to the family members in the event of
insured‟s death
• Hospitalization expenses are covered from the first year and pre and post
hospitalization expenses are covered from the second year if the first year is
claim free
Highlight the correct answer
ver. 1 – w.e.f. Aug. 16

Recap
• Which of the below statement is correct with regards to a

hospitalization expenses policy
• Only hospitalization expenses are covered
• Hospitalization as well as pre and post hospitalization expenses are
covered
and a lumpsum amount is paid to the family members in the event of
insured‟s death
• Hospitalization expenses are covered from the first year and pre and post
hospitalization expenses are covered from the second year if the first year is
claim free
ver. 1 – w.e.f. Aug. 16

Recap
• Identify which of the below statement is correct?
• Health insurance deals with morbidity

• Health insurance deals with mortality
• Health insurance deals with morbidity as well as mortality
• Health insurance neither deals with morbidity or mortality
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Recap
• Identify which of the below statement is correct?
• Health insurance deals with morbidity

• Health insurance deals with mortality
• Health insurance deals with morbidity as well as mortality
• Health insurance neither deals with morbidity or mortality
ver. 1 – w.e.f. Aug. 16

Recap
Which of the below statement is correct with regards to cashless

service provided in health insurance?
•It is an environment friendly go-green initiative started by insurance
companies to promote electronic payments so that circulation of physical
cash notes can be reduced and trees can be saved.
•Service is provided free of cost to the insured and no cash is to be paid as the
payment is made by the Government to the insurance company under a
special scheme
•All payments made by insured have to be made only through internet
banking or cards as cash is not accepted by the insurance company
•The insured does not pay and the insurance company settles the bill directly
with the hospital
ver. 1 – w.e.f. Aug. 16
Recap
Which of the below statement is correct with regards to

cashless service provided in health insurance?
•It is an environment friendly go-green initiative started by insurance
companies to promote electronic payments so that circulation of physical
cash notes can be reduced and trees can be saved.
•Service is provided free of cost to the insured and no cash is to be paid as
the payment is made by the Government to the insurance company under a
special scheme
•All payments made by insured have to be made only through internet
banking or cards as cash is not accepted by the insurance company
•The insured does not pay and the insurance company settles the bill
directly with the hospital
ver. 1 – w.e.f. Aug. 16

Recap
Identify the correct full form of PPN with regards to hospitals

in health insurance.
•Public Preferred Network

•Preferred Provider Network
•Public Private Network
•Provider Preferential Network
ver. 1 – w.e.f. Aug. 16

Recap
Identify the correct full form of PPN with regards to hospitals

in health insurance.
•Public Preferred Network

•Preferred Provider Network
•Public Private Network
•Provider Preferential Network
ver. 1 – w.e.f. Aug. 16

Recap
Identify which of the below statement is incorrect?
•An employer can take a group policy for his employees

•A bank can take a group policy for its customers
•A shopkeeper can take a group policy for its customers
•A group policy taken by the employer for his employees can
be extended to include the family members of the employees
ver. 1 – w.e.f. Aug. 16

Recap
Identify which of the below statement is incorrect?
•An employer can take a group policy for his employees

•A bank can take a group policy for its customers
•A shopkeeper can take a group policy for its customers
•A group policy taken by the employer for his employees can
be extended to include the family members of the employees
ver. 1 – w.e.f. Aug. 16


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Chapter 19

Health Insurance Products

ver. 1 – w.e.f. Aug. 16

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• Providing financial assistance to pay for medical facilities in case of

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• Indemnity Covers – Pay for actual medical expenses

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• Individual Cover – Offered to retail customers and their

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Based on common understanding, IRDA issued guidelines on

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• An indemnity based health insurance policy

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Pre hospitalization expenses:

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• Definition – Medical Expenses incurred immediately after the Insured

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• An individual health policy also has a provision to take care of expenses

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• Pre-existing diseases – Defined as “Any condition, ailment or injury or

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• Obesity (including morbid obesity) treatment

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• Individual Coverage: An individual insured can cover

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• Family Floater: It covers the family consisting of spouse,

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• This policy works along with a basic health cover having a

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• These plans are designed to offer cover to elderly people who

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• There are 2 types of plans for long term care

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• IRDA (Micro-Insurance) Regulations 2005

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• This policy is designed to provide cheap medical insurance

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• The sum insured per insured person is restricted to Rs.5,000

Head of the family 70 100 120 140

• Premium qualifies for tax benefit under Section 80D of the

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• This policy is available to groups of 100 or more families. In

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• RSBY has been launched by the Ministry of Labour and

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• Transport allowance of Rs.100/- per visit