Jeevan Arogya may not be the right choice for your Health Insurance

Health insurance is becoming very popular now because of the increase in longevity and the ever increasing medical costs. Lot of inquiry is happening around to see, which policy is better? Lot of policies are launched by general insurance companies and stand alone health insurance companies. Life insurance companies also joined the race by launching health related policies. Latest in the market is Jeevan Arogya by LIC. In this policy, you can cover all members of your family including parents and in laws!

Two types of health insurance

Health insurance policies are of 2 types. (1) Defined Benefits policies (2) Indemnity based policies.

In defined benefit policies, the claimant will get the predetermined amount, if he is affected by any of the predefined diseases. The payment will be in full as per the value of the policy and not related to the actual expenses incurred. If you are covered for kidney failure for 3 lakhs and if the actual expense is 2 lakhs, you will get 3 lakhs here. You can even claim this by producing Xerox copies of the bills as proof.

In indemnity based policies, you will get the actual cost of treatment reimbursed on production of the original bills, but upto the amount of insured. In the above example, you will get only 2 lakhs here.

Which is better? Looks like the defined benefit policies?? No, please read on…

In Defined benefit policies, you will get the amount, only in case of the pre defined diseases and the resultant treatment. It is not sure to any of us that, which diseases are going to take us to hospital and when? So always better to go for Indemnity based policies, where all diseases are covered. (Of course subject to conditions and exemptions in the first 4 years)

What is Jeevan Arogya?

It covers the Hospital cash Benefit (HCB) which means, you will be paid a defined amount for the number of days you have stayed in the hospital.  There are 4 variants available under this feature.

Rs 1000/- per day, Rs 2000/- per day, Rs 3000/- per day and Rs 4000/- per day. Your premium and other features and sum assured will be dependent on the variant you have chosen under HCB.

LIC’s Jeevan Arogya is a Defined Benefit Policy. In addition to Daily Hospital Cash Benefit for the number of days of Hospitalization, the product provides the following additional benefits:

• An additional lump sum benefit for specified Major Listed Surgeries (140 surgeries) for a maximum limit of 100 times the Hospital Cash Limit.

• An additional lump sum benefit for all specified Day Care Procedures (140 procedures)  at 5 times of the Daily Hospital Cash Limit.
• An additional benefit for Other Surgeries (not covered in the above 2) are covered by providing 2 times of the Daily Cash Limit, per hospitalization day.

Other benefits in Jeevan Arogya

The product’s most unique feature provides the benefit of increasing Limits on Benefits every year. This, to an extent takes care of the health care inflation. There are 2 ways the limits would increase.

Renewal Bonus: The Daily Cash Limits increase every year by 5%, up to 1.50 times of the Initial Daily Cash Limits. This is not dependent on Claims.

No Claim Bonus: Addition of another 5% to the Initial Daily Cash Limit, without any maximum limit – when there are no claims in the previous year.

Premium Waiver: In event of a claim for a Major Surgical Benefit, this feature in the product would waive the subsequent one year’s annual premium.

Rider Benefits: You can choose to go for extra Term Insurance and accident benefit in this.

Limitations of Jeevan Arogya

The Maximum Benefit under this product is Rs. 4 Lakhs. With Health care Inflation in India above 15%, every year this is a very low cover.

The lump sum benefit, again, for certain Major Surgical ailments are very low, compared to the possible actual costs. Moreover the 100% of major surgical benefits are payable only to 15 out of the fixed 140 surgeries. For other cases, the payment is limited to 40% and 60%.

The coverage for other treatments (which are not listed) is Rs. 20000/- for this highest coverage plan in the product.

There is no Cashless Network. However, there is a provision for Cash Advance upto 50% of Claim for Admissible Major Surgeries.

Pre-Existing Ailments are excluded for life.

Is it worth going for Jeevan Arogya?

The policy is very complex for a customer to understand. The benefits under Major Surgical benefits are payable for selected 140 surgeries only. Day care procedures are there for another 140 procedures. All other surgeries are excluded for these 2 benefits. Even though, all family members can be covered in a single policy, the unclaimed major surgical benefit of any one insured is not transferable to any other insured like in Family floater policies.

You can go for this policy, if you are already covered under an indemnity based health insurance of decent value. In that case, the money coming out of Jeevan Arogya will be an extra buffer, in case of any health issues. So the first priority should be to go for an indemnity based health insurance and Jeevan Arogya should be a top up.

It is like icing on the cake. But you should buy the cake first.