Life Insurance Companies to Sell Health Insurance Plans Soon
In a bid to offer better health insurance plans at competitive prices to customers, the Insurance Regulatory and Development Authority of India (IRDAI) is mulling to allow life insurance companies to sell indemnity-based health policies. Following an order issued on 25th February 2020 by the IRDAI, a committee has been formed to analyse the utility in letting the life insurers to offer health plans soon.
The committee will incorporate eminent officials from every insurance sector. It may comprise life insurers, general insurers, and standalone health insurers. The committee is required to table its suggestions after examining different elements. The components of analysis contain feasibility, revenue generation scope for life insurance, statutory provisions apply, and issues allowed by the chairperson.
To streamline this process, the committee is advised to hold meetings when required within two months. If a positive report comes in, then customers can soon have an option to select indemnity based health coverage from around 24 more insurers, considered as per the number of life insurance companies.
As of now, life insurance companies offer only fixed benefit health insurance policies to customers. In the fixed benefit health insurance policy, a fixed amount equals to the sum insured, is paid to the insured individual if an event (insured under the policy) happens. In such cases, a lump sum amount is given irrespective of the actual medical expenses incurred during hospitalisation.
However, only general insurance providers and standalone health insurers can issue indemnity-based health insurance plans. It includes individual and family floater health policies. Here, policyholders are insured against healthcare expenses only up to the sum insured.
Therefore, an insured member is to be reimbursed only with the actual medical cost incurred at the time of hospitalisation, up to the amount of sum insured. To seek reimbursement, policyholders need to present essential documents like hospital bills, medical reports, etc.
If the policyholder has chosen the cashless hospitalisation option, then he/she needs to pay the required amount only and other costs are taken care of by the insurer by connecting with the network hospital.
Fierce lobbying by private life insurers is speculated after this move to seek entry into the booming health insurance industry. With this step, the IRDAI can introduce a long-term pricing model in health insurance too. This implicit change is going to benefit the customers by simplifying the health plan purchase process and making more schemes available
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