The debate on whether health insurance is safer in the hands of life companies or general insurers has been on since quite some time in India. Today, a host of non-life and life companies, including public sector behemoth Life Insurance Corporation (LIC) offer health cover to individuals. While the non-life companies continue to dominate the health space, this does not mean that they have had a smooth sailing all along, having been beset with loss-making health portfolios.
The recent withdrawal of cashless facility at some of the ‘five-star’ hospitals by public-sector general insurers points to the underlying problem. The insurers have cited exorbitant rates that patients have to cough up for a health cover as the reason for the withdrawal. Though many such hospitals are now back in the fold, the episode may have got some policyholders thinking about viable alternatives. In this backdrop, perhaps, the debate warrants a revisit.
“The world over, it’s mainly life insurance companies that look after the health insurance segment. Then, there are standalone health companies. It is only in India that the health domain is managed primarily by non-life insurers. We believe that life companies are better suited to handle this sector,” says Sudhir Sarnobat, CEO, Medimanage Insurance Brokers. So, what are the kind of products on offer from life insurers? They come in two variants — benefit policies and reimbursement policies (which are based on the principle of indemnity).
The latter category is similar to the one provided by the general insurance companies in that they offer to reimburse the actual expenses incurred by the policyholder in the event of hospitalisation. Health companies too offer cashless facility through their network hospitals. Again, the procedure for making a claim is identical to that of non-life insurers and the policyholder is required to submit the relevant documents. Under benefit policies, a pre-fixed lump-sum amount is paid out to the insured once the claim is made. LIC offers a benefit policy with an in-built investment component.