Health Insurance Article : Floater Health Insurance Policy

The incidence of chronic diseases has been on the rise all over the world in the past few years. People have been spending large amounts of money treating various kinds of diseases. The cost of medical treatment too has been ever rising. This is where medical insurance can come handy. By spending a small sum on a regular basis in a health-care policy, you can undergo medical treatment assured that your precious savings are not affected by the cost of treatment. The peace of mind alone could help you to heal quicker!

As in any booming economy, India's economic growth is being driven largely by the middle class. Notwithstanding our 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 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 hospitalization for more than 24 hours, including room charges, doctor/surgeon fee and medicines etc. This policy also covers expenses 30 days prior to hospitalization and 60 days post hospitalization.

So...what is the difference between regular health insurance plans and Floater health insurance plans?

We can study this with the following example. A family of three - husband (34 years), wife (33) and child (6) - with a regular health insurance policy pays a premium of Rs. 7580. The same family will have to pay only Rs. 6024 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 above-mentioned example, 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 Mediclaim. With the Floater plan, however, the full claim would have been paid out since the total sum insured of the family was Rs.300000 - 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 lakhs.



Floater plans have 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) in the form of deduction from total taxable income. It is Rs 20,000 for senior citizens.

Policy Exclusions
30-day exclusion: Medical charges incurred, except those arising out of accidental injuries, within the first 30 days from the start date of the policy are not covered. This clause does not apply for 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 age increases, you should start looking to migrate to individual sum insured policies.

Author: Kairav Shah
www.apnainsurance.com

NIC in overhauling mode

The National Insurance Company (NIC) is overhauling its business processes to be more competitive in a deregulated general insurance market.
The public sector behemoth is targeting 12% growth in FY 08-09 on the back of a projected target of Rs. 4500 crore premium collection.

Global consultancy major Price Waterhouse Coopers (PWC) is acting as consultant. The restructuring process includes relocation of a few offices in Mumbai and Kolkata. Earlier, PWC had also contributed to NIC's business re-engineering initiative.

NIC's plans include massive growth projections in the health insurance market, up to 25-30%. Other initiatives include selling cheap discounted house insurance specifically targeted at flat owners.

Furthermore, NIC is planning to focus specifically on corporate clients this year. Selected regional offices at Mumbai, Delhi, Chennai, Kolkata, and Hyderabad will exclusively deal with corporate clients who pay annual premiums in the Rs. 25-30 lakh range.

Another PWC recommendation includes a centralized claim settlement system. A pilot project for this process has been started in Kolkata, halving the time for settlement to 20 days.

General insurers faced a tough year in FY 08 with free-pricing seeing heavy price discounting by the various players in an attempt to build market share.

Source: www.apnainsurance.com

How India calculates inflation

Last Thursday, when journalists questioned Finance Minister P Chidambaram about the rising inflation rate in the country, he quipped: 'Thank God, it's not Friday.'
Yes, indeed, there was no need for Chidambaram to comment on the inflation rate on Thursday, because in India inflation is calculated and announced on Fridays.
How is inflation calculated in India? Why is it announced on Fridays? And how do other countries calculate inflation? Read on . . .

India uses the Wholesale Price Index (WPI) to calculate and then decide the rate of inflation in the economy. Most developed countries use the Consumer Price Index (CPI) to calculate inflation.
WPI was first published in 1902, and was one of the major economic indicators available to policy makers until it was replaced by the Consumer Price Index in most developed countries by in the 1970s.
WPI is the index that is used to measure the change in the average price level of goods traded in wholesale market. In India, price data for 435 commodities is tracked through WPI which is an indicator of movement in prices of commodities in all trades and transactions. It is also the price index which is available on a weekly basis with the shortest possible time lag -- two weeks. The Indian government has taken WPI as an indicator of the rate of inflation in the economy.
CPI is a statistical time-series measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It is a price index that tracks the prices of a specified basket of consumer goods and services, providing a measure of inflation.
CPI is a fixed quantity price index and considered by some a cost of living index. Under CPI, an index is scaled so that it is equal to 100 at a chosen point in time, so that all other values of the index are a percentage relative to this one.
Some economists argue that it is high time that India abandoned WPI and adopted CPI to calculate inflation.
India is the only major country that uses a wholesale index to measure inflation. Most countries use the CPI as a measure of inflation, as this actually measures the increase in price that a consumer will ultimately have to pay for.
CPI is the official barometer of inflation in many countries such as the United States, the United Kingdom, Japan, France, Canada, Singapore and China. The governments there review the commodity basket of CPI every 4-5 years to factor in changes in consumption pattern.
WPI does not properly measure the exact price rise an end-consumer will experience because, as the same suggests, it is at the wholesale level.
The main problem with WPI calculation is that more than 100 out of the 435 commodities included in the Index have ceased to be important from the consumption point of view. Take, for example, a commodity like coarse grains that go into making of livestock feed. This commodity is insignificant, but continues to be considered while measuring inflation.
India constituted the last WPI series of commodities in 1993-94; but has not updated it till now that economists argue the Index has lost relevance and can not be the barometer to calculate inflation.
The WPI is published on a weekly basis and the CPI, on a monthly basis. And in India, inflation is calculated on a weekly basis and announced on every Friday.

Source: Commodity Online May 27, 2008

MDRT Brand India as ‘Perfect’ Insurance Market

A global network of chief insurance professionals has today branded India as the ideal market for insurance products, suggesting it had a significant scope for long term development and infrastructural strengthening over the coming years.

The Million Dollar Round Table, a worldwide network of insurance executives, has branded the size and demographic makeup of the Indian insurance market as ‘perfect’ in terms of the potential market for insurance products. With a massive population comprising of young, educated consumers, the market looks set to boom over the coming decades as it continues to present serious investment opportunities for insurance providers.

The Indian market would benefit from a rise in insurance, given the infrastructural and capital formation benefits brought about in markets with growing insurance activity, allowing business and development to flourish alongside economic development.

India and China are fast growing economies. It would be foolish not to be interested in this part of the world, especially India, and increasing our membership because this is an economic story that is very exciting and we want to be a part of it. The Indian market could contribute a further 40,000 members to the Million Dollar Round Table Network.

Whilst the Indian insurance market has grown in line with the country’s economic development, it still remains relatively undeveloped in terms of other mature insurance markets, leaving room for significant development, particularly amongst some of the world’s existing key players.

It remains to be seen whether more insurers will jump on the badwagon and enter the market, and indeed whether the market can hold up to its current potential.

Source: Insuremagic

United India Insurance launches new health product

United India Insurance Co Ltd unveiled a new health product called "Family Medicare Policy".

The policy covers family members under a single Sum Insured against hospitalisation expenses due to disease or accident and any family member can avail upto the entire sum during the policy period.

The proposer can be aged between 18 and 80 years and the family cover is available for Self, Spouse and dependent children. A wider range of Sum Insured options is also available starting from Rs one lakh to Rs 10 lakh. In addition, the policy also has add-on covers like ambulance charges, hospital daily cash and Section 80-D benefits.

Source: Insuremagic

IDBI Fortis Life plans more branches

IDBI Fortis Life Insurance will set up 100 branches by the end of the fiscal. The company, which started operations in March last, currently has 30 branches and an agency force of 500.

So far, they have around 7,000 customers and have received around Rs 20 crore of premium. IDBI Fortis has introduced a unit-linked insurance product with health riders called "Wealthasurance" and a mortgage reducing term plan called "Homesurance".

Bancassurance is a key model for the company as IDBI and Federal Bank (which are partners in the insurance venture) provide access to 1,000 branches and 10 million customers.

They expect around two-thirds of our business to come from bancassurance. Around 1,000 staff members have been trained. IDBI Fortis Life Insurance on launched their business on Mastek's "Elixir Policy Administration System module".

The solution is designed to support all product lines including traditional life, health, unit-linked, annuities and pension products. It is an end-to-end policy administration platform that integrates the front and back office.

Source: Insuremagic

Global churn may bring Chinese insurance firms to India

Chinese insurance firms could end up having a strategic stake in life insurance in India if their global acquisition plans attain fruition. Chinese insurers Ping An and China Life and other institutions like Bank of China have expressed their ambitions to acquire international insurance companies.

Earlier this year, media reports were abuzz with talks about a possible bid for UK insurer Prudential by Ping An - China's second largest insurance company. The company, which announced a net profit of $709 million for the Jan-Apr quarter, is listed both in Hong Kong and China. There are also reports that Bank of America is interested in bidding for Direct Line and Churchill Insurance Group owned by the Royal Bank of Scotland.

Post-liberalization, multinational insurers headquartered in the US, UK, Europe, South Africa, Canada and Japan have participated in the insurance industry in India. But, there is no Chinese company in this sector yet. Unlike banks, there is no rationing of license in insurance.

However, there is a ceiling of 26% on the total shareholding by foreigners in an insurance venture. But, despite the ceiling some companies have managed to acquire management control in their insurance partnership with the consent of the Indian partner.

If a Chinese insurer such as Ping An does acquire Prudential, it will give the firm a 26% stake in the largest private life insurance company - ICICI Prudential Life Insurance. According to sources, ICICI Bank does not have any exit clause if its foreign partner is acquired by another company.

Several, insurers in the West have been weakened by losses on account of their exposure to sub prime debt. Given their appetite for long-term investments, insurance companies are the main investors in mortgage securities. The mortgage crisis in the US has resulted in a fall in the market value of most mortgage securities forcing insurance companies to write down the value of their assets. In March this year, Prudential reported a 47% drop in pre-tax profit due to poor performance of its life fund after writing off credit risks in the US following the sub prime crisis.

Other insurers which have been insulated from the sub prime are seen as acquirers. Italian insurer Generali is seen as one such acquisitive company. One reason why the company has been able to post a 21% growth in profits was the absence of sub prime in its books. At that time everyone thought they were too conservative. Now everyone is happy.

Source: Insuremagic

ICICI Pru prims health to be key growth driver

Having emerged as one of the core areas of ICICI Prudential Life's portfolio in the last couple of years, the company is putting its efforts behind the health vertical to make it one of its major growth drivers.

Among the plans are variants of the flagship products like critical illness, hospital care and a crisis cover plan that includes cancer and diabetes care. The company also plans to explore the health savings and reimbursement category in future.

Binay Agarwala, senior VP and head, health business and corporate strategy, ICICI Prudential Life told DNA Money, "As a strategic initiative, the organisation energy in terms of marketing, actuarial and operation is dedicated to the health insurance space. Although the ticket size is small, the volumes have grown."

At present, over 10% of policies sold by the company are health policies.

What about competition from other private players also getting into health space?

"The idea is to make the bulk of sales beyond the Top 10 cities and this would be the major differentiator," Agarwala said, adding: "For many such customers, this will be the first of any health policy. We've created a comprehensive distribution scale by reaching out to 1,600 locations across India."

The health segment, which is dominated by indemnity plans (mediclaim) from general insurers, has seen the entry of almost all life players and has grown five-fold to Rs 5,000 crore from Rs 1,000 crore five years ago. Last year, health insurance business grew 63%.

"In the current year, there could be improved versions of some of our existing products like Diabetes Care. We will also think of new offerings keeping in mind the market dynamics and also profitability to both the customer and the company," Agarwala said.

Two new areas the company is likely to weigh are the savings-linked insurance plans and the reimbursement category. Both would help increase penetration of health insurance.

Internationally, health insurance with savings is a growing segment. But for this, much would depend whether health insurance plans qualify for tax benefits under Section 80D of the Income Tax Act.

Source: Nandini Goswami / DNA MONEY

LIC launches Money Plus I scheme

Kolkata: Life India Corporation (LIC) has launched its Unit Linked Endowment Plan, Money Plus 1, which offers both investment and insurance benefits.

The minimum sum assured of this scheme is five times the annual premium and the maximum sum assured can go upto 30 times the premium, which will depend on the age at entry level.

The age at the entry level can be between 0-65 years with the policy term ranging from five to 30 years.

R R Dash, zonal manager, LIC said: "We have targeted to get Rs.1,800 (Rs.18 billion) from Money Plus 1 this fiscal."

Last fiscal, total premium volume of LIC including renewals stood at Rs.138.95 billion in the eastern zone. United Linked Insurance Plans (Ulip) was the highest performer, which fetched Rs.37.04 billion. The net profit in 2007-08 was Rs.61.93 billion. The company expects the surplus income to grow by 50 percent this fiscal.

The company is focusing on reducing Ulip's marketshare to 60 percent from present 76 percent. Other conventional policies will constitute the remaining 40 percent of the market share.

Dash said: "People are more interested in monetary returns than health cover."

LIC already has 45 satellite offices and plans to construct nine more soon. It also plans to strengthen northeast operations.

D K Banerjee, chief engineer, LIC said: "The company has acquired a plot near Salt Lake for Rs.2.76 billion. It will construct a 50-storied commercial buildings on that plot, which will house offices of various companies."

LIC has altogether 81 buildings in Kolkata. Another housing project of LIC will commence from this year. In the current fiscal the company has earmarked Rs.20 billion for housing projects.

LIC has approximately 1,000 buildings all over India.

Source: IANS