The incidence of chronic diseases has been on the rise all over the world in recent years. People have been spending large amounts of money treating various kinds of diseases. The cost of medical treatment, too, has been rising.
This is where medical insurance can come in handy. By spending a small sum on a healthcare policy on a regular basis, you can undergo expensive medical treatment without having to worry about your precious savings getting eroded.
As in any booming economy, India’s economic growth is being driven largely by the middle classes. Notwithstanding the increased spending capabilities, we are aware of every rupee that goes out of our pockets. We are constantly on the lookout for the best product in terms of cost as well as returns. It is no different with insurance, health insurance in particular.
A relatively new type of health insurance plan called the floater health insurance plan helps you get the maximum benefit for money spent. This is a health insurance plan where all members of a family can be covered under the same plan for a single premium, with the sum assured available to any one member or to all members in case of any eventuality during the term of the policy.
The policy covers medical expenses incurred as an inpatient during hospitalisation for more than 24 hours, including room charges, doctor surgeon fees and medicines, etc. This policy also covers expenses 30 days prior to hospitalisation and 60 days post hospitalisation.
So, what is the difference between the regular health insurance plans and Floater health insurance plans?
We can study this with an example. As the table shows, a family of three - husband (34 years), wife (33) and child (6) - with a regular health insurance policy pays a premium of Rs 7,580. The same family will have to pay only Rs 6,024 if they opt for a floater policy.
In case of the regular health policy, you have to specify the sum insured against each family member. In the event of a claim, if the expenses move beyond that amount, you have to bear the difference. The floater policy, on the other hand, provides each family member the benefit of the entire sum insured under the policy.
In the example above, when the claim amount increased in the daughter’s case, only the amount up to her respective sum insured would have been paid. In case of the floater plan, however, the full claim would be paid since the total sum insured of the family was Rs 3,00,000, wherein all members of a family were covered under the same plan for a single premium. The sum assured was available to any one of these three persons or to all the three persons in case of any eventuality during the tenure of the policy.
There is an upper limit in floater health insurance plan coverage, of Rs 3 lakh.
Floater plan has some additional benefits, such as:
- Free health checkup coupon for the senior most member of the insured family
- An option for 2-year cover that offers a continuous 2-year protection with no increase in premium in the second year. This one-time payment of premium for 2 years takes care of your renewal hassles for next year. The 1-year cover is also available
- No health check up required up to the age of 45 years (as on last birthday).
- Income tax benefits under section 80D, which from the current financial year has increased from Rs 10,000 to Rs 15,000 as deduction from the total income; Rs 20,000 for senior citizens.
Policy exclusions
All health policies have the following exclusion: Medical charges incurred, except those arising out of accidental injuries, within the first 30 days of the commencement of the policy cover are not covered. This clause does not apply to subsequent renewal (without a break) of this policy.
The floater policy is based on the probability of the number of people in a family falling ill during the year. A young family has a lower probability of falling ill. Therefore, the floater policy can be an effective cost-saver. As the age increases, you should start looking to migrate to individual sum insured policies.
Source: DNA Money
Tuesday, May 20, 2008
Allianz eyes 10% emerging market growth in 2008
Frankfurt: Europe's biggest insurer Allianz is aiming for top-line insurance growth of at least 10 per cent in emerging markets this year, Allianz board member Werner Zedelius told Reuters in an interview.
"Our goal is to add at least 10 per cent per year in our growth markets and we've managed it up to now. We're doing everything we can to make it again this year," said Zedelius, responsible for business in 26 markets in Europe and Asia.
Allianz set a target in 2006 to earn 15 billion euros ($23.40 billion) in premiums from emerging markets, mainly central and eastern Europe and the Asia-Pacific region, within three to five years.
At the end of 2007, premiums were 12.8 billion euros, a 24 per cent increase over the previous year, with Asia-Pacific contributing 8.8 billion euros and eastern Europe 4 billion.
"We will probably reach our goal sooner rather than later," he said.
Emerging markets developed positively last year and Allianz also added some acquisitions, such as Russian insurers Rosno and Progress-Garant, which also boosted premiums.
"We more than met all our targets for sales and earnings," Zedelius said.
Prices for potential takeover targets still varied across emerging markets, Zedelius said.
"We are mainly focused on internal growth but we also look selectively at acquisitions," he said. "There will certainly be some buying opportunities also in the future," he said.
Allianz's growth market businesses steered clear of investments in subprime-related assets but they have noted some uncertainty among retail investors in some markets in the wake of the crisis.
For example, new business suffered in the first quarter in India, but generally the company has seen no big declines.
Allianz is pushing for long-term growth in China, where it earned more than 300 million euros in premiums in 2007.
It plans to raise the number of agents there to 40,000 in 2009/2010 from 11,000 now and is also expanding geographically, though the regions where it is already present have a combined population of around 250 million people.
"We've just received a licence for the Beijing region, which I definitely wanted to have ahead of the Olympics to show: We are now in the capital."
Allianz has focused so far on life insurance in China, which contributed about 290 million euros in premiums last year, with sales helped by cooperation agreements with banks ICBC and Agricultural Bank of China.
Zedelius said he was concerned for the safety of Allianz staff in Sichuan following last week's devastating earthquake in the region, noting that one employee was still missing.
"We don't expect significant claims for Allianz, however. We're still small in property insurance and while we may have some cases on the life side, that's what we're there for."
In Japan, Allianz has already reached its target for 2008, just six weeks after starting life insurance sales, Zedelius said.
In India, Allianz has more than 10.7 million policies outstanding. "That's an incredible number for a company that didn't even exist in 2001," Zedelius said.
Premiums there totalled almost 1.8 billion euros last year, about 1.4 billion of which were in life insurance.
Zedelius said Allianz was in concrete talks about its expansion into asset management in India but declined to give details.
Source: Reuters
"Our goal is to add at least 10 per cent per year in our growth markets and we've managed it up to now. We're doing everything we can to make it again this year," said Zedelius, responsible for business in 26 markets in Europe and Asia.
Allianz set a target in 2006 to earn 15 billion euros ($23.40 billion) in premiums from emerging markets, mainly central and eastern Europe and the Asia-Pacific region, within three to five years.
At the end of 2007, premiums were 12.8 billion euros, a 24 per cent increase over the previous year, with Asia-Pacific contributing 8.8 billion euros and eastern Europe 4 billion.
"We will probably reach our goal sooner rather than later," he said.
Emerging markets developed positively last year and Allianz also added some acquisitions, such as Russian insurers Rosno and Progress-Garant, which also boosted premiums.
"We more than met all our targets for sales and earnings," Zedelius said.
Prices for potential takeover targets still varied across emerging markets, Zedelius said.
"We are mainly focused on internal growth but we also look selectively at acquisitions," he said. "There will certainly be some buying opportunities also in the future," he said.
Allianz's growth market businesses steered clear of investments in subprime-related assets but they have noted some uncertainty among retail investors in some markets in the wake of the crisis.
For example, new business suffered in the first quarter in India, but generally the company has seen no big declines.
Allianz is pushing for long-term growth in China, where it earned more than 300 million euros in premiums in 2007.
It plans to raise the number of agents there to 40,000 in 2009/2010 from 11,000 now and is also expanding geographically, though the regions where it is already present have a combined population of around 250 million people.
"We've just received a licence for the Beijing region, which I definitely wanted to have ahead of the Olympics to show: We are now in the capital."
Allianz has focused so far on life insurance in China, which contributed about 290 million euros in premiums last year, with sales helped by cooperation agreements with banks ICBC and Agricultural Bank of China.
Zedelius said he was concerned for the safety of Allianz staff in Sichuan following last week's devastating earthquake in the region, noting that one employee was still missing.
"We don't expect significant claims for Allianz, however. We're still small in property insurance and while we may have some cases on the life side, that's what we're there for."
In Japan, Allianz has already reached its target for 2008, just six weeks after starting life insurance sales, Zedelius said.
In India, Allianz has more than 10.7 million policies outstanding. "That's an incredible number for a company that didn't even exist in 2001," Zedelius said.
Premiums there totalled almost 1.8 billion euros last year, about 1.4 billion of which were in life insurance.
Zedelius said Allianz was in concrete talks about its expansion into asset management in India but declined to give details.
Source: Reuters
Choosing a no-frills insurance plan
If you are looking for a no-frills insurance plan that covers you against risk to life, then a plain-vanilla term assurance plan may be your ideal investment.
It provides basic life cover to an individual and compensates dependants for the loss of an earning member of the family, in the event of his death.
For individuals, term assurance is the first type of life insurance to be bought before they plan for any other kind of investment.
Of late, individuals taking home loans or other large obligations have started to opt for a term insurance policy along with the loan, in order to secure their family against the loan obligation in the event of their death. With expanding choices, premiums on term assurance policies have become very competitive.
A term policy can be taken to cover an individual alone or his/her spouse (joint life) or to cover business partners. Term insurance plans are non-participating policies. Therefore, if the insured survives the term, he will stand to receive no maturity value at the end of the term.
Term insurance is intended to compensate your family for loss of income. Assuming Avinash, aged 25, earns Rs 5 lakh per annum and his yearly financial commitments total Rs 3 lakh, he has to plan for the sum assured based on the requirement. In this case, if the dependant can earn a return of 7 per cent per annum, he has to buy a plan for Rs 40 lakh.
A point to remember here is that most insurance companies offer term plans for a maximum period of 25-30 years and cover is provided till the age of 65 years.
Apart from one policy for income replacement, an individual can take separate policies for the other financial goals such as education and marriage of the dependant children. Separate policies can be taken for these and discontinued if the goal is reached.
Types of term insurance
Level Premium: Under this option, your risk cover and premium remain the same throughout the policy term. This type of option is considered to be best if one prefers to plan for income replacement, after one’s time. In the event of death, a lumpsum payment is made and the same can be invested to secure monthly income for dependants.
Decreasing cover: The sum assured gets reduced every year and becomes nil at the end of the term. These plans are ideal if linked to your home loan or to any other business loan. As the loan outstanding reduces, the cover will fall accordingly.
Single Premium: Several insurers allow you to pay a lumpsum premium at one go. This may factor in a good discount to your regular premium and is ideal if you have an irregular income stream and cannot commit to regular premia over time.
Riders
Term policies also allow you to add other riders or benefits on payment of additional premium. A few key ones are:
Critical illness benefit: If one is diagnosed with any illness covered by the policy, a lump sum is paid and the critical illness rider then ceases to be in operation. However, the basic sum assured continues to be in operation.
The general rule is that if one survives for 30 days after the critical illness, the entire sum insured, including critical illness, is paid.
In comparison to general insurance, here the entire cover is paid, irrespective of the actual money spent on treatment. Some insurance companies offer a cover that is as high as Rs 50 lakh under this benefit.
Accelerated Sum Assured benefit: On diagnosis of any one of the critical illnesses, the sum insured is paid and the basic policy terminates without any value.
Accident death benefit: In case of demise by accident, an amount equal to the sum assured is paid in case of accident, or if death occurs within 90 days from the accident.
Choosing term plans
Some insurance companies offer return of premium and others offer plain products. It is advisable to take plain products and save on the extra premium, which can be invested in other avenues.
It is important to remember that taking insurance gets more expensive as you get older, therefore locking into a term plan early in your life makes sense. Premiums for term insurance policies are based on a number of factors, including age, gender, state of health and lifestyle.
Some insurance companies offer a discount on the premium for a non-smoker.
Therefore, it may be best to do some comparison shopping based on your requirements and select the provider who offers a competitive rate.
Tax benefit: The premium paid on your policy is eligible for tax benefits under the overall investment limit under section 80 C. In the event of death, the money received from the insurance company is tax exempted under section 10 (10D).
The premium paid for accelerated sum assured is exempted under section 80 D.
Hence, plan your requirement and select a term insurance policy as soon as possible because when it comes to term policies, early initiation translates into straight savings on your premia.
Source: Business Line
It provides basic life cover to an individual and compensates dependants for the loss of an earning member of the family, in the event of his death.
For individuals, term assurance is the first type of life insurance to be bought before they plan for any other kind of investment.
Of late, individuals taking home loans or other large obligations have started to opt for a term insurance policy along with the loan, in order to secure their family against the loan obligation in the event of their death. With expanding choices, premiums on term assurance policies have become very competitive.
A term policy can be taken to cover an individual alone or his/her spouse (joint life) or to cover business partners. Term insurance plans are non-participating policies. Therefore, if the insured survives the term, he will stand to receive no maturity value at the end of the term.
Term insurance is intended to compensate your family for loss of income. Assuming Avinash, aged 25, earns Rs 5 lakh per annum and his yearly financial commitments total Rs 3 lakh, he has to plan for the sum assured based on the requirement. In this case, if the dependant can earn a return of 7 per cent per annum, he has to buy a plan for Rs 40 lakh.
A point to remember here is that most insurance companies offer term plans for a maximum period of 25-30 years and cover is provided till the age of 65 years.
Apart from one policy for income replacement, an individual can take separate policies for the other financial goals such as education and marriage of the dependant children. Separate policies can be taken for these and discontinued if the goal is reached.
Types of term insurance
Level Premium: Under this option, your risk cover and premium remain the same throughout the policy term. This type of option is considered to be best if one prefers to plan for income replacement, after one’s time. In the event of death, a lumpsum payment is made and the same can be invested to secure monthly income for dependants.
Decreasing cover: The sum assured gets reduced every year and becomes nil at the end of the term. These plans are ideal if linked to your home loan or to any other business loan. As the loan outstanding reduces, the cover will fall accordingly.
Single Premium: Several insurers allow you to pay a lumpsum premium at one go. This may factor in a good discount to your regular premium and is ideal if you have an irregular income stream and cannot commit to regular premia over time.
Riders
Term policies also allow you to add other riders or benefits on payment of additional premium. A few key ones are:
Critical illness benefit: If one is diagnosed with any illness covered by the policy, a lump sum is paid and the critical illness rider then ceases to be in operation. However, the basic sum assured continues to be in operation.
The general rule is that if one survives for 30 days after the critical illness, the entire sum insured, including critical illness, is paid.
In comparison to general insurance, here the entire cover is paid, irrespective of the actual money spent on treatment. Some insurance companies offer a cover that is as high as Rs 50 lakh under this benefit.
Accelerated Sum Assured benefit: On diagnosis of any one of the critical illnesses, the sum insured is paid and the basic policy terminates without any value.
Accident death benefit: In case of demise by accident, an amount equal to the sum assured is paid in case of accident, or if death occurs within 90 days from the accident.
Choosing term plans
Some insurance companies offer return of premium and others offer plain products. It is advisable to take plain products and save on the extra premium, which can be invested in other avenues.
It is important to remember that taking insurance gets more expensive as you get older, therefore locking into a term plan early in your life makes sense. Premiums for term insurance policies are based on a number of factors, including age, gender, state of health and lifestyle.
Some insurance companies offer a discount on the premium for a non-smoker.
Therefore, it may be best to do some comparison shopping based on your requirements and select the provider who offers a competitive rate.
Tax benefit: The premium paid on your policy is eligible for tax benefits under the overall investment limit under section 80 C. In the event of death, the money received from the insurance company is tax exempted under section 10 (10D).
The premium paid for accelerated sum assured is exempted under section 80 D.
Hence, plan your requirement and select a term insurance policy as soon as possible because when it comes to term policies, early initiation translates into straight savings on your premia.
Source: Business Line
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