Why Surgical benefit plan cannot replace mediclaim

Surgical benefit plans are being pitched more and more. Some think it can replace mediclaim since surgeries are often a large component of hospitalisation. Surgical benefit plans pay a fixed amount which can be higher than your actual medical expense whereas mediclaim is an indemnity plan which only covers your medical expenses. So, does that make surgical benefit plans better since you can get higher reimbursements than mediclaim? Mediclaim premiums also happens to be higher than surgical benefit plans. Here is what you should know about these products.

First, 46% of claims arise from non-surgical treatment. Mediclaim products will cover non-surgical as well as surgical treatments, and hence, it is a more appropriate option than surgical cover. 

Second, partial claim settlement of mediclaim should not be the reason to run towards surgical benefit plan. If the insurer is unjustified in claim deductions, there are grievance redressal options. You have to make efforts to get justice.

Third, surgical benefit plans have a major drawback which can lead to low payment for several surgeries and you can do nothing about it. For example, LIC Jeevan Arogya will pay you 20% of the claim if your surgery does not fall in the three categories defined by it. It is written in your policy and hence you cannot even fight for a higher payment. Read the surgical benefit policy fine print before buying it. 

Moneylife Foundation Insurance Helpline received following case – “I had undergone Total Laproscopic Hysterectomy on 20th April 2014 and submitted my claim to LIC under Jeevan Arogya. My HCB (hospital cash benefit) is Rs3000 per day and MSB (Major surgical benefit) is 100 times the HCB. My claim was settled by TPA with a much lesser amount, where they classified my surgery as an Other Surgery and not Major Surgery. According to LIC, only Hysterectomy for malignant conditions is classified as a Major Surgery. I feel this is injustice, because the surgery part, hospital stay and the recovery period for the patient is the same even if there is no malignancy involved (which is my case). The hardship or suffering is the same for both kinds of patients as far as the surgery is concerned. Nowadays, hysterectomy (without malignancy) is a routine operation performed on a wide scale across the country. So I wish to contest this decision of LIC, kindly guide me as to whether my point of view is valid or not and shall I pursue the matter with the higher authorities of LIC.”

We replied, “Unfortunately, TPA is going by the rules here and hence not unjustified. LIC Jeevan Arogya considers hysterectomy for malignant conditions as category-2 and pays 60% for it. In your case it is not even classified as category 2 (60%) as it is not malignant, but goes as 'other surgery' (default, category 4) which pays 20%” 

Jeevan Arogya customers have to realise that the unique selling proposition (USP) of this plan is based on the event of one of the 140 major surgeries occurring—as defined in the plan. It is possible that the surgery you have to undertake may not fall among the 140 surgeries defined in the plan, or may be classified as Category 2, 3 or 4 (entitling you to 60%, 40% and 20%, respectively). The plan will be less useful in such cases and this is the limitation of the plan.

This issue is not limited to LIC Surgical benefit plan, but all surgical benefit plans in the market. There is no substitute for mediclaim. Surgical benefit and critical illness can only be add-ons to mediclaim.

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