IRDAI calls for reduction of sum insured on standard health indemnity insurance to Rs 5 lakh

The Economic Times (ET) has reported that Insurance Regulatory Development Authority of India (IRDAI) has proposed to mandate all general and health insurers to offer a standard indemnity-based health insurance product with a sum insured ranging from Rs 1,00,000 to Rs 5,00,000 on individual as well as family floater basis.
There is a glut of options and its increasingly difficult to make decisions especially for financial products like insurance. Insurance agents often push products that will get them the most commission. The IRDAI has therefore proposed to "mandate all general and health insurers to offer a standard indemnity-based health insurance product with a sum insured ranging from Rs 1,00,000 to Rs 5,00,000 on individual as well as family floater basis." 
There are two types of health insurance covers: indemnity and defined benefit plans. In an indemnity plan, one can claim reimbursement of actual expenses incurred up to the amount insured for specified illnesses as per the terms and conditions of the policy. In a defined benefit insurance plan, one is insured for pre-agreed specified illnesses. 
The IRDAI specified that it is making this proposal to allow people to choose a suitable health insurance policy which provides coverage to basic hospitalisation charges. The only differential of this standard product would be the premium rates charged by various insurers. 
This is an attempt by IRDAI to standardise health insurance products so that it becomes easier for people to choose the right policy based on their needs. 
Earlier in February 2019, IRDAI, in its Draft Guidelines on Standardization of Individual Health Product, had mandated all general insurers to offer a standard indemnity-based health insurance product with a basic sum insured ranging from Rs 50,000 to Rs 10 lakh. The proposed standard health product will have to be offered on indemnity basis only. 
Kapil Mehta, CEO, told ET, "The proposed range of Rs 1 to Rs 5 lakh is fine because the product is meant to cater for entry level health insurance, as lower sum assured means lower premium to pay for the policy. "However, this does not prevent insurers from offering much higher sum assured and, indeed, there are several insurers that offer Rs 50 lakh or higher of sum insured. The standardised product will be added to the current range of health insurance products. 
According to the draft proposal guidelines issued in February, the standard health product shall offer only the following mandatory covers: 
  • Hospitalisation expenses: The hospitalisation expenses shall cover the following; 


  • Room, Boarding, Nursing Expenses all-inclusive as provided by the Hospital / Nursing Home


  • Surgeon, Anaesthetist, Medical Practitioner, Consultants, Specialist Fees whether paid directly to the treating doctor / surgeon or to the hospital


  • Anaesthesia, blood, oxygen, operation theatre charges, surgical appliances, medicines and drugs, costs towards diagnostics, diagnostic imaging modalities, and such other similar expenses. (Expenses on Hospitalization for a minimum period of 24 hours only are admissible. However, this time limit will of 24 hours shall not apply when the treatment does not require hospitalization as specified in the terms and conditions of policy contract, where the treatment is taken in the Hospital and the Insured is discharged on the same day.)


  • Intensive Care Unit (ICU) / Intensive Cardiac Care Unit (ICCU) expenses.


  • Expenses incurred on treatment of Cataract subject to sub limits, if any, based on sum insured


  • Dental treatment necessitated due to an injury


  • Plastic surgery necessitated due to disease or injury


  • Domiciliary Hospitalization
AYUSH treatment: Expenses incurred on treatment under Ayurveda, Unani, Sidha and Homeopathy systems of medicines shall be covered subject to fixed and standard sub-limits based on Sum Insured. 
Pre-hospitalisation medical expenses incurred for a period not less than 30 days prior to the date of hospitalization shall be admissible. 
Post-hospitalisation medical expenses incurred for a period of not less than 60 days from the date of discharge from the hospital towards Consultant fees, Diagnostic charges, Medicines and Drugs wherever required and recommended by the Hospital / Medical Practitioner, where the treatment was taken, following an admissible claim shall be included. 
Cumulative Bonus (CB): Sum insured (excluding CB) shall be increased by 5% in respect of each claim free policy period (where no claims are reported), provided the policy is continuously renewed without a break subject to maximum of 50% of the sum insured (excluding CB accrued) under the current policy period. 
Wellness Incentives: To enable the individuals to lead longer, healthier and more productive lives, the following wellness features shall be made available to all the insured persons by duly complying with the provisions of Regulation 19 of IRDAI (Health Insurance) Regulations, 2016 and the applicable guidelines notified thereunder. 
Health Check-ups and Consultation services: Under this cover, the insured person shall be made available an access to the health consultations across the network providers or other empanelled hospitals of the insurer, for getting periodic consultation of at least once in a policy year. 
Disease Management: Under this cover, every insured person shall be provided an access to the professional medical services for bettering the health profile. As part of post-hospitalization services follow up care shall be made available, as part of Disease Management. Insurers may also provide other suitable services under this programme. 
Fitness Activities: Under this cover, insurers shall provide parametric indices based on fitness regime being followed by insured person, during the policy tenure and reward mechanism shall be designed so as to incentivize the policyholders to continue with the fitness regime. 
Outpatient consultations or treatments: Under this programme, insured person shall be provided services of outpatient consultations or treatments periodically or based on the pre-determined triggers contingent upon the health of the insured. 
No deductible features are permitted under the base cover. 
A standard Co-Pay shall be offered. 
Add-ons or optional covers are not allowed to be attached to the base health cover under standard health product policy.



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