What product (individual or floater) or category (Mediclaim or Hospital Cash) should I go for?

How to Choose the best product for your needs?

There are broadly two kinds of product that are available

  1. Hospital Cash – They provide lump sum benefit in case of hospitalization regardless of the expense incurred. They are basically defined benefit product (i.e. regardless of actual expense incurred, they will pay fixed per-defined payouts)
  2. Health Insurance – These are indemnity kind of products which reimburses actual expenses incurred, subject to overall coverage (Sum Insured or SI) taken by insured.

Hospital Cash

Hospital Cash are recommended as supplementary product and not main product to provide your family protection from any unplanned hospitalisation. However in case you have Health Insurance coverage (plan) from your employer, you can use them to supplement since they pay based on photocopy of bills (original are used to claim actual expense incurred from Health Insurance provided by the employer). Details of the same will be discussed later. In short these are not to be treated as Health Policy, even though the premium paid enjoys the benefit under Section 80D of Income Tax Act. In case, these are the only health policy available for certain section of people (people who have undergone Coronary Artery Bypass treatment). One must go for it.

Health Insurance
In Health Insurance, one can choose between Individual cover or Floater Cover. In case of Floater Cover, a chosen sum assured floats over the entire family and entire amount can be used by any member in case of emergency. The advantage its offers is lower premium as compared to individual cover, better coverage and better sub –limit (certain insurer like National Insurance etc specifies limits like room rent as % (1%) of Sum Insured and hence higher sum insured means higher limits). The disadvantage being if family consists of elderly members, chances of usage of limit by senior member are higher and hence, lower limit might be available for younger people. Also premium is calculated based on age of the eldest member of family (– thus loading of premium on entire family). It is advisable to go family floater policy and not to include senior people (people above age 55-60) in such policy. They should be covered under separate floater plan or individual plan.

Critical Care Products
Also available are Critical Care products. They are similar to Hospital Cash, in payouts i.e. they pay lumps-sum amount in case the insured contact the listed critical disease and survive for 30 days after the diagnosis. This coverage is recommended Strongly to those having a family history of the critical illness and do not have enough saving since any of these illness can financially ruin the family. Tata Executive Wellsurance is a combination of Critical Insurance & Hospital Cash which pays not only lump-sum amount in case insured is diagnosed with critical insurance (and survive for 30 days after the diagnosis of critical illness), but also pays fixed payout in case of hospitalization. It pays a fixed amount for surgeries. While mostly the Critical Insurance is offered by Life Insurance companies (they normally offers as rider along the life insurance policy) stops either after person attains 65 to 70 years of age or in case insured contact any one the listed critical illness, Tata Wellsurance is whole life plan and it does not stop even of person insured is diagnosed and benefit is paid out. Thus ensuring that person is covered against other critical insurance for life time.

Top Up Products
Top Up products are also available which pays only after per-decided threshold in single illness. Say Top Up of Rs 5 Lac with threshold of Rs 3 Lac will reimburse expenses up to Rs 5 Lac only when expense incurred on any one illness exceed Rs 3 Lac. It is obvious that such coverage is utilized when on suffers from Critical illness like Cancer. This is available on individual as well as Floater basis.

Super Top Up
Also available is Super Top Up (From United India Insurance Co.) which is akin Top Up plan, the difference being Super Top comes into effect when one has utilized one’s Health Insurance up to Thresh hold. For eg. Super Top up of Rs 7 Lac with Thresh Hold of Rs 3 Lac will reimburse hospitalization expenses up to Rs 7 Lac after one has exhausted Rs 3 Lac limit. This too is available on Individual as well Floater basis.

Top Up & Super Top plans are economical and very useful in enhancing coverage. Earlier maximum health insurance was available for Rs 5 Lac. Recently most of the private insurance companies have started offering Health insurance upto Rs 10 Lac. Only Max Bupa offers Health insurance up to Rs 50 Lac. Those who wish to go for coverage of over Rs 10 Lac or those who wish to take coverage only from Public Sector (Government) Insurance companies can use these plans to achieve their objective economically.

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