Times of India
06 June 2011
By Priya Kapoor

A mediclaim covers only hospitalisation costs. What do you do if you need post-surgical medication or are temporarily disabled? Here are the additional covers you can take to boost your health insurance.
Health Insurance
When Delhi-based Rajat Gupta suffered a heart attack last year, the blow was more than physical. For though the 46-year-old Gupta’s medical insurance took care of surgical and hospitalisation expenses, he had to shell out thousands of rupees for the post-operation medication. To add to his financial woes, Gupta had to take a pay cut because he was advised bed rest for several weeks.

Gupta would have been able to handle the financial crisis better if he had either had a contingency fund or a cover that would have taken care of these supplementary expenses. Spurred by financial advisers into buying medical insurance, most people pick the most common form called mediclaim. "Most people think their mediclaim is sufficient, but they must see what it entails. It should be a comprehensive cover," says Arvind A. Rao, Mumbai-based financial planner.

Also known as the hospitalisation reimbursement policy, a mediclaim primarily covers only hospitalisation costs, which include treatment and doctor’s consultancy fee for illnesses and accidental injuries. Though it also covers the cost of chemotherapy, radiotherapy, dialysis, etc, it typically doesn’t insure post-hospitalisation costs.

These can include protracted consultation and medication expenses, incidental costs such as those involved in commuting or a companion’s stay at the hospital, the cost of being away from work, or in case of a partial or complete disability, the loss of a job.

"A mediclaim builds the foundation for a sound health insurance planning as it ensures coverage of all eligible expenses incurred in the event of hospitalisation. However, only mediclaim is not sufficient as it may not cover all the expenses," says Gaurav Garg, managing director and chief executive officer, Tata AIG General Insurance. What does one do in such cases? Build a special fund only for medical emergencies or take an additional cover that spans sundry costs or those not included in a mediclaim? Here are some covers that you can consider.

Critical illness cover: If you have a family history of critical illnesses or are nearing 40, it is advisable to take this policy. It covers specified critical illnesses and includes posthospitalisation expenses like consultation, medicines etc. "Such an ailment affects more than a person’s physical health, taking a toll on the family’s economic well-being. The treatment can use up the entire mediclaim amount, resulting in no cover for the rest of the year.

It can also shrink the cover for the other people covered under the policy. If it is a family floater plan, it can reduce the insurance for other members in the family," says Sanjay Datta, head, customer service, ICICI Lombard.

However, unlike a mediclaim, this policy pays you the cover amount only if you survive beyond 30 days of the diagnosis. Most insurers cover 9-12 critical illnesses and conditions, including cancer, coronary artery bypass surgery, heart attack, stroke, kidney failure, aorta surgery, heart valve replacement, major organ transplant and paralysis. But as experts say, scout around in the market and pick the cover that offers the maximum number of illnesses (see Cost of treatment).

You can buy the policy either as a standalone cover or as a rider to your life insurance policy, traditional policies or Ulips. So if you are 30 years old and pick a 10 lakh standalone policy from a general insurer like Tata AIG, it would cost 6,021 per annum for 10 such illnesses. However, if you were to take it as a rider along with, say, Aegon Religare term insurance, you can opt for a 50 lakh life cover and 10 lakh for nine critical illnesses. Your total premium would come to 13,340, of which 3,040 would be the premium for the critical illness cover. Such a rider is also available with other traditional plans across insurers.

While the rider option seems inexpensive, there is a catch here. If a claim is made, some insurers reduce the cover by the same amount as the claim. Besides, there is usually a ceiling on the sum assured in the case of a rider. This is the reason experts recommend buying this cover separately instead of linking it to the life insurance.

Hospitalisation cash cover: While the hospital bills are taken care of by mediclaim, there are several incidental expenses that add to the financial burden but are typically not considered by an individual while buying medical insurance. These include commuting costs incurred by family members or the money spent on an extra bed for a companion’s stay in the hospital.

To cover such expenses, you can buy a standalone hospital cash cover from general insurers such as Royal Sundaram or Tata AIG or life insurers like SBI Life or ICICI Prudential. You can also buy it as a rider with your life insurance from companies such as Bajaj Allianz Life or Birla limit.

Insurers also provide ICU allowance, recuperating benefit and reimbursement of medical bills in case of an accident. For instance, Tata AIG’s Individual Accident and Sickness Hospital Cash policy provides a daily benefit of up to 5,000 along with reimbursement of medical bills. If you are 25-40 years old, Bajaj Allianz General Insurance offers a daily cash allowance of 500, for which the annual premium is 400, and for an allowance of 1,000, it is 600 for a maximum of 30 days. Royal Sundaram provides the recuperating benefit, along with the daily hospital allowance, at an annual premium of 785.

Accidental disability and dismemberment cover: This cover is especially important for people in risky jobs as it covers partial or permanent disability resulting from an accident. While mediclaim takes care of hospitalisation after an accident, it does not provide for the financial support the family would need if the person loses his job due to partial or complete, temporary or permanent disability.

Such a cover provides the full sum assured if one suffers permanent and complete disability, say, due to the loss of both hands or eyes. If there is a permanent loss of one limb or an eye, the compensation is usually 50% of the sum assured.

"Ideally, the sum assured should be more than your life insurance cover for the simple reason that in such a circumstance not only does a family suffer loss of income, but the living expenses of the affected person also go up," says Rahul Aggarwal, CEO, Optima Insurance brokers.

The cover is available both as a standalone policy or as a rider with life insurance. So, if a 30-year-old man buys a disability and dismemberment cover of 10 lakh along with a 25-year term insurance of 50 lakh, he would have to shell out 10,750 as an annual premium, of which 1,350 would be the premium for the rider. In case you go for a standalone cover of 10 lakh, say Tata AIG’s Accident Guard policy, you would have to fork out 1,562 for the same sum assured.

Despite the slightly higher premium, experts recommend the standalone policy as it offers a wider coverage. Besides normal benefits, it provides loss of income benefit for certain weeks if the person is disabled temporarily. This is usually 1% per week of the sum assured for a maximum period of 104 weeks, but insurers fix a ceiling on the weekly outgo.

However, before considering these additional covers, you must check if the size of your mediclaim is optimum. Experts recommend a medical insurance of at least 5 lakh given the rising cost of treatment. If you have a small cover, there’s no reason to worry. Instead of buying another cover, you can simply add to it by picking a top-up plan.

It’s an add-on plan with a much smaller premium than that of an ordinary plan. However, its coverage starts only when the cost of hospitalisation exceeds a threshold limit or a deductible. Suppose you have a mediclaim of 2 lakh and buy a top-up plan of 3 lakh, which comes with a threshold limit of 2 lakh.

If your hospitalisation bill is 4 lakh, the first 2 lakh will be met by mediclaim and the remaining will be taken care of by the top-up plan as the total cost exceeds the threshold limit of 2 lakh. A 3 lakh cover for a 30-35-year-old as a top-up is available for 1,500-1,800, while the same cover under a normal mediclaim costs around 3,500.

Insurers such as United India Insurance, Star Allied and Health, and Bharti Axa General Insurance offer this policy both for individuals and as a family floater. Sun Life. The standalone cover usually entitles you to a daily amount if you are hospitalised for more than 24 hours due to sickness or an accident. The cash limit is predefined and the premium increases with the rise in