In case of general insurers, policies need to be renewed annually and the premium is fixed only for a certain number of years
In India, you can buy a health insurance policy from three types of insurers, standalone health insurers for whom health insurance is their bread and butter, life insurers whose primary focus is life insurance but also offer health insurance products and general insurers whose portfolio also includes health insurance besides varied other products like car insurance, home insurance etc etc.
Of late, life insurers are focusing more on the health insurance because of the higher growth in this segment and various initiatives to create a level-playing field in this space for life and non-life players. Increased income-tax benefit under Section 80D too is a reason for them to approach the customers.
So when you decide to buy a health insurance policy, from whom should you avail yours? That's the question every customer faces and is actually a tough one to answer given the similarity of the products and benefits being offered. But often close scrutiny can show you the chinks in the armour and clearly differentiate the pros and cons of each policy.
Globally, health insurance is a domain of standaline health insurers and life insurers. But in India, the health products offered by life insurers often differ from those offered by general insurers and standalone health insurers. Though amid tough competition these differences are getting addressed or reduced to bare minimum, still being conscious about them can hold one in good stead.
One difference is often noticed in costs. Health products offered by life insurer tend to be costlier due to more stringent underwriting policies, higher commission they need to dole out to their agents and because of the investment options attached to such policies.
The second big difference often is in the claim process itself. General insurers offer cashless cover, which is not the case with many policies offered by life insurers. Plus, general insurers pay the actual cost incurred on hospitalisation.
In comparison, life insurance companies pay a fixed amount either on hospitalisation or on being diagnosed with a particular disease. In the second case, one runs the risk of the offered amount falling short of the actual cost. But then life insurers' benefit products can be used as substitute for loss of income due to ill-health,
One big positive about health plans from a life insurer is that these products tend to be more long-term in nature, with the tenures ranging up to 20 years. In the case of general insurers, policies need to be renewed annually (which means the chances of premium rising every year are high), and the premium is fixed only for a certain number of years.