A committee constituted by the IRDAI in its draft plan, has suggested a health savings product to extend the reach of health insurance in the country.
Currently, anyone who wants a medical expense cover has two options. He can either buy an indemnity plan – that is, a medi-claim policy where the hospitalization expenses of the policyholder are reimbursed – or a critical illness policy where on the diagnosis of the named illnesses, the sum assured is paid to the policyholder and he can use the money for any purpose – not necessarily for medical expenses.
The new health savings product will have features similar to an endowment plan in life insurance, with the difference being that the risk cover will be for health and the amount from the policy can be only used for expenses related to medical treatment.
In the new health savings plan, the cover will be linked to a health policy the customer already holds. Suppose, you have a Rs. 5-lakh health cover, the new health savings plan will promise you cover when your expenses exceed Rs. 5 lakh – basically it will function like a top-up plan.
The draft paper proposes agent commission of 15 per cent of the annual premium in the first year, 10 per cent in the second year, and 5 per cent in the third, fourth and fifth years.
The recent amendment to the Insurance Act, where agent commission for traditional plans capped at 35 per cent in the first year, has been removed. The new health savings plan is likely to have a three year lock in and a minimum investment of Rs. 25,000.
