Podcast : Building a Comprehensive Health Cover – Basic Policy, Super Top-Up, and Critical Illness

1. 

   T Muthukumar

   September 17, 2023 at 9:59 pm

   Thank you for the interesting topic. Some points that require clarification:
   (a) Does the critical illness cover (CIC) come with a family floater type option? If not, is it cheaper to opt CIC as a rider/add-on cover in the basic floater policy or opt for each family member a separate CIC?
   (b) Can you elaborate on the concept of IRDAI mandated (?) moratorium period of eight years beyond which a claim cannot be rejected? How true is this regulation by IRDAI? If true, any data on how much the insurance providers respect this regulation? Does the moratorium period reset if the policy is ported before and after eight years?
   (c) Is it possible to use one of the prime portfolios (or a fresh one) as an emergency health portfolio?
   (d) This is not a query but a opinion: After 28:52, you suggest that insuring oneself at a young age is better because of the possibility that company may deny policy or add a loading to premium, as one gets old with lifestyle diseases. Though I understand and agree with the spirit with which you suggest this, my opinion is that, unlike term insurance the health policy premium is not fixed and increases as one grows old (age slab-wise)—irrespective of the number of years the policy has been in force and with no claims. Thus, entering a health policy near middle-age (40-45+) or running it from a young age (20-25+) seems (almost) same from the premium point of view, for a reasonably healthy young adult with no PED, ignoring NCB, moratorium period etc.
   Thanks in advance.
   1. 

      Bhavana Acharya

      September 22, 2023 at 4:55 pm

      Thanks!

      a) Multiple people can be added in a critical illness cover, however, note that since this is a defined benefit policy, there is no floating cover. We believe a standalone critical illness policy offers more broader coverage (of critical illnesses). The maximum cover offered by a standalone critical illness policy can be higher than what an add-on to basic health policy offers, which is usually linked to the sum insured of the basic policy.

      b) The IRDAI guidelines implies that starting 1st Apr 2021, for policies for which premiums have been paid for continuous 8 years, no claims can be contested except for fraudulent claims and exclusions. According to the guidelines, porting of policy doesn’t make it ineligible for the moratorium period. Since this is a relatively recent development, we are yet to find more details on the impact of this.

      c) You don’t need to create a separate emergency portfolio for health alone. What we mentioned in the podcast was that you can use an emergency portfolio that you would have created to meet medical expenses as well. We have a readymade emergency portfolio here, or you can use your own mix of liquid/very short term funds + FDs from Prime Funds & Prime Deposits.

      d) You are correct, a health insurance policy does not allow any advantage in premium for buying it early in life as premium gets revised upwards with age. It is also true that for a healthy individual, entering a policy at middle age is likely to cause a similar yearly premium outgo as if he/she was renewing it from the 20s; However, since insurance is about preparing for the unexpected, we believe it’s better not to delay too much and risk developing a high-cost medical condition that might render one ineligible for insurance.
      1. 

         T Muthukumar

         September 25, 2023 at 12:46 pm

         Thank you for the detailed response. It helps a lot.

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