Two years back, Sanjay intended to buy medi-claim policy for his family including his parents with adequate coverage at the budgeted premium. After getting information on different policies, someone had suggested him to buy a family floater plan but the premium rates for family floater policies were ranged between Rs20,000 to Rs 24,000 per year for Rs 5 lakh sum assured. While not satisfying this offer, he kept searching for an adequate sum assured, to remain within his budgeted premium. After a while, he visited his nationalized bank for some routine work and he saw something startling advertisement on the wall that his bank was offering a family floater medi- claim plan including parents from a government insurer for an annual premium of Rs12,000 to its customer. There were no medical checkups; premium rates were not age-specific; there was no co-pay and no loading in future years due to claims. After seeing a low premium with amazing features and benefits, he was very happy to make feel a proud himself that only has to be a bank accountholder to get this product. Without dipping further into this it seemed to be a perfect match for his requirements and he signed the dotted lines to ensure that his family is protected for healthcare costs within his budgeted premium. Like Sanjay, if you feel that it is the right product with the similar features for your medi-claim requirements buying from your bank, you are forgetting to know flip side of the situation on buying these plans despite looking amazing have lots of pitfalls and limitations which you should know before taking the plunge into these kinds of bank medi-claim products.
About Medi-Claim policies offered by banks
Medi-claim insurance from banks on offer for accountholders is not a new concept in India as they have tied up with insurers; usually public sector general insurers to offer health insurance plans with unbelievable low premium rates that are 50% lower in many cases, high entry age and largely no medical checkups than a regular family floater policy directly from an insurance company. The unbelievable part is that the premiums are the same for all ages. These policies work a tailor made group products and its premium rates, benefits and new conditions are negotiated year-on-year at the time of renewal. Such changes could adverse affect your long term planning for health insurance.
Ad-hoc association and benefits
Being merely an intermediary, banks are just associated with the insurance company and sold medi-claim products on the behalf of insurer subject to periodic reviews, usually a one-year contract. Your Bank could change the insurance company, or the insurance company could withdraw the cover, at the time of renewal. Insurance company can bring in change in terms and conditions such as the premiums could be revised upwards, benefits curtailed or new conditions imposed in, looking at an adverse claim ratio claims made by the group against the premium paid. Worse, if association breaks in future, you will be restored into that situation where you have to again find a suitable policy and what if you were developed some illness in between these 4-5 yrs, who will cover that. Hence, banks could not able to do anything and only customer will suffer here because he did his long term health insurance planning with this policy.
Hassle Claim Settlement through TPA
Though the policy is approved through the bank, the claims settlement process will be done through a third party administrator (TPA) or the insurer and getting a TPA card may also be an uphill task in some cases. The bank would not help at all. The TPA has an agreement with individual hospitals for cashless facilities. If the TPA servicing you does not have an agreement with the hospital of your choice, you will have to forego the cashless facility and opt for the reimbursement of a claim, which carries a risk factor of claim rejection or amount deduction.
Pathetic Service Issues
Even if you had purchased a medi-claim through your entrusted bank, banks being banks will not provide you any service for claims, and you won’t have a personal agent or broker who would follow up, run around and help you settle your claim. The customer has to deal with the TPA on his own, which could be a daunting task and a stress on your already busy schedule.
The onus is also on you to understand what is covered and not covered, PED waiting period, specific procedure waiting period, claims filing procedure along with time-limits, procedure for intimating a TPA at the time of hospitalization, TPA contacts and so on.
Health insurance is a long term financial product and almost all these family floater policies can be renewed till the age of 80 rather than lifelong renewable. In absence of the right expertise with most banks, they have not trained their branches to sell them. Most branches did not have the product brochures. In some cases, the bank staffs hand out brochures without knowing what they are selling. Banks medi claim products may, thus be suitable for those who don’t mind a little bit of inconvenience in service and are prepared for hiccups in getting the claim. Bank Mediclaim products being a group category, the proposer in the policy is the bank, and hence, in most cases, you may not be able to enjoy Tax Benefits u/s 80D on such a product. Worse, most of the policies don’t have a ‘no-claim-bonus’ (NCB).
Who should buy?
Whilst highlighted pitfalls of bank medi-claim products, if you still feel that an inexpensive bank medi- claim policy is the appropriate choice for your requirements, the onus is on you to be aware of your responsibilities and the fine print in your mediclaim policy. Understanding your rights is important. If you purchased the policy in utmost good faith and believe that the policy wordings are in your favour for any claim you have filed, but have got a rejection notice from your insurance company even after approaching its grievance cell, you have to take the fight to the next level.
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