By now you know how the increasing cost of hospitalization and healthcare expenses have made health insurance an inevitable necessity for all, right? Let’s now understand how buying health insurance from a general insurance company and a health policy from a life insurance company can mean two totally different things. And it is when you know this difference, can you select the best for yourself and can you avail of all the benefits you are entitled to.
Read on….
Health insurance vis-à-vis General Insurance: (or non-life insurance)
Any insurance which is non-life insurance typically falls under the category of General Insurance. This includes insurance for myriad things including car, fire, travel, household, marine etc. But this is not all. As general insurance pertains to non-life insurance, it also includes Health Insurance, wherein a person insures his and his family’s health against hospitalization due to various unforeseen ailments and growing medical expenses.
Hence, health insurance comes under general insurance as the latter provides protection against unforeseen events such as accidents, illness, et al. General insurance companies offer health policies which are mainly short term in nature. This means, that the health insurance policies can be renewed year after year and the premium amount varies with age.
Health insurance covers offered under general insurance, include mainly hospitalization covers either on reimbursement or cashless basis. The Third Party Administrators (TPAs) mainly offer cashless service as they have arrangements with various hospitals, who are the service providers. The TPAs also help in reimbursement claims.
Health insurance vis-à-vis Life insurance:
Many of us tend to confuse health insurance or mediclaim with life insurance. Though, both of them are vastly different in structure and content, while health insurance primarily caters to your health related expenses until you are alive, life insurance typically means insuring a person’s life wherein the returns are accrued due to your death or at the end of the term of the policy.
There are various life insurance companies that offer health benefits and packages. Firstly, the health related policies under life insurance companies cover certain critical illnesses. For example, certain private companies that offer life insurance to customers cover about 36 critical illnesses which include heart attacks, stroke, cancer, paralysis etc. Now this in turn means that once a person visits a doctor for treatment, and if the doctor then after diagnosis confirms a serious illness, then on the basis of the doctor’s report, the insured will get a lump sum amount from the company.
The benefit of these health packages is such that, if a person, who already has a mediclaim policy, also gets a health policy from a life insurance company, he would doubly benefit. But how does this work? For instance, a person suffers from cancer and it costs him 2 lakh rupees for treatment. He can then claim this money as a mediclaim (2 lakh) as well as a health policy benefit from the life insurance company with which he is a customer (2 lakh). Thus he gets a total of four lakh rupees. That’s a benefit when compared to a person who only has a mediclaim of 2 lakh rupees.
Health policies by life insurance companies are long term plans (over 10, 20 years and above)
One of the prime ways in which life insurance companies tend to sell health policies are mostly in the form of investment plans. These are essentially known as Health ULIP plans. However the difference in these plans and others lies with regard to:
the hidden charges which are high ,a waiting period of three years before which you cannot claim,High premium rates.
The positive however, is that the plan comes across as an investment option wherein you pay high premiums over a longer time period and you can claim full money later in some policies (that is either the premium amount collected or the sum insured for, whichever is higher) if you do not claim within the mentioned time period.
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Written by Medimange
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Question by coryzun: Can I enroll in employer short term disability insurance even though I declined it 2 1/2 yr ago?
My employer’s open enrollment apparently does not include their short term disability insurance (which employees pay 100% of premium.) They said since I declined it 2 1/2 years ago when I started I will never be eligible. My friend in the insurance business says this is FALSE.
Best answer:
Answer by Barry auh2o
True. You had the opportunity then and declined. You would have to wait until there is another enrollment period, if ever.
Your friend has to realize, that whatever is in the master policy, ( the contract between the company and the insurer) prevails.
NO company can sell of offer to sell anything in the state which has not been approved by that state’s insurance commissioner.
Ask them to show you a copy of the enrollment form and point out to you where it says you have only this chance to apply.
I’m afraid you are going to be disappointed.
Give your answer to this question below!
Your friend in the insurance business is too quick to say “false”. If the employee pays, is it a policy they take on with each new hire? It might be a private policy, and not a group.
If you HAVE to take it when you hire on, and you didn’t then, and want to now, a main reason for refusal to let you, is adverse selection – example, you’re planning on going out on maternity leave this year, and want the coverage for that, and then will drop it again. Can’t make money that way, so maybe the terms of the policy are, it’s available at hiring time only. Or maybe there’s a year wait before maternity is covered (a year before conception, that is).
I’d ask the HR for where it says that in writing. But there’s not much else you can do, unless you want to find out which company it is, and complain in writing to the state insurance department.