[Starting from today I have added a new category - on financial advices, reviews and reports, largely limited to banking, financial services and insurance sectors. Hope this will help the readers of RE. The first article in this series is by a friend Kislay Verma, and he reviews a new product in the insurance market. Regards, DJ]

First Care
An Insurance Product Review by Kislay Verma

In India ‘Health Insurance’ is always a subject matter of General (Non Life) Insurance and mediclaim policies have traditionally been sold by general insurance companies like New India Assurance Company, Oriental Insurance Company etc.

Health Insurance market has not shown encouraging trends in these past years and its contribution to the growth of post-liberalized insurance industry has been fairly low. Not many known players have courted this market with more than just a cursory interest – sure, there are a regional health insurance players in South India which have cropped up in the recent past (Star Health Insurance being one of them which I can recall, Apollo is coming in a big way) but overall the scenario is pretty uncluttered.

The reason for this slow pace of growth in Health Insurance was the tariff regulations norms (Sec 64 of The Insurance Act 1938) wherein general insurance had limitations on the premium charged. The adverse claims ratio also contributed to it, apart from Morale Hazard (not to be confused with Moral Hazard).

Now that the general insurance business has been de-tariffed post January 2007 I expect some positive trends in this sector. Do not be surprised if you find a quantum leap in the premium of your Mediclaim policy or even your car’s Third Party Liability Insurance.

However seeing the current vacuum in the sector, the life insurance companies are quickly jumping onto the health insurance caravan to reap the best possible early-bird benefits that would not be there once the de-tariff-ed general insurance players launch their own more improved (read more expensive) product versions. But since the life insurance companies are not permitted to sell health insurance, some companies like Bajaj Allianz and a few others have smartly added an element of life risk into health insurance and brought it in the purview of life insurance.

We’ll talk about Bajaj Allianz Life Insurace Company’s First Care Policy, currently touted the hot and happening product in this sector.

What the Product Is?

First Care offers a medical health benefit along with a life cover and takes cares of all the medical expenses incurred.

The Positives

Unlike the previous plan i.e. Health Care, this time with First Care the company has taken a rare initiative, tied up with a TPA to provide cashless facility for treatment in the listed hospitals. Another plus point which I find is that it has a term of three years- a vantage point for the policy holder as the premium is leveled unlike in Mediclaim (where each year as the age increases the premium also shoots up).

The Negatives

Perhaps the biggest disadvantage in the product is that, unlike popular misconception, this policy does not cover pre existing diseases nor does the cover start from the day one. There is a compulsory one month waiting period for any illness. It s ok for a disease like, say cancer, but for uncomplicated procedures like tonsilectomy there is an unnecessary waiting period of 1 year and in most of the illnesses like Kidney stone-lithotripsy, Cataract, Hysterectomy, Cholecystectomy, Turp, Hernia, Haemorrhoidectomy, Fissurectomy, Fistulectomy, Exploratory Laparotomy, Laphole, Operative Laparoscopy, any Gynaecological disease, Hydroceoele and Fibroids there is a waiting period of full 2 years. It is amazing that in a policy term of three years the policy holder waits for two years for cover of most illnesses.

Well maybe they purposely kept these waiting periods. Because they knew that the policy in any case would never be used (not that I wish anyone ever uses it, but then the fact one goes in for insurance is to take cover against unforeseen circumstances, and diseases don’t usually offer a notice period before appearing!).

So, if you think the above names have set your mind staggering, read the brochure again. The day treatment list is replete with more high-profile diseases. Whatever happened to more common diseases like typhoid, malaria or even allergic rhinitis the ones which you and I are more likely going to suffer from? It’s as if the product designers have intentionally tried to keep the common man and his diseases out of its purview!

Going by this list, a Rupees One Lakh sum assured seems extremely futile.

And then comes all the caps, limits and curtailments! The organ transplant is limited to Rs. 150000/-. The amount for an organ transplant seems too less even if it is for a small little organ. Cataract is still fine but when it comes to buying an artificial knee the low end would cost Rs. 75000 and for females add a 15% extra. Hips would be even costlier to replace. Buying is not enough it has to be fitted and the procedure would unburden your pocket anywhere above Rs. 150000 on an average. So would this policy help? Certainly no!

If the limits and caps in the policy don’t get you, the exclusions will surely send you reeling in dismay. With over 20% of the brochure dedicated to the exclusions listed out – 35 exclusions to be precise – I seriously doubt the insurer’s intention to pay claims.

But of course, the company is not telling all this too easily. Have a look at the product brochure. Reading it would surely make any potential policyholder confused with all the medical jargons liberally peppered all across. Maybe they wanted to make it sound heavy-duty and serious; simplicity is something the brochure designers have probably never heard of. Sample this: Maximum cover for cardiac pacemaker for one chamber is Rs. 50000 and for two is Rs. 150000. I wonder if anybody knows about the total number of chambers in a human heart. If not, how this make any difference to him anyway!

Most policies in India are anyways taken not for their benefits but for hoodwinking that grand old bete-noir of all of us: the inevitable tax-man! But sadly, this policy will not be of much help here even because it doesn t make too intelligent a sense for availing tax benefits u/s 80 D (limit of Rs.15000 from this year). In layman terms, it would be like spending ten rupees to save two or maximum three rupees.

Whether seen as a medical help or as a tax saver, in both respects the policy is woefully short of its supposed benefits. At best, it s a good policy to complete the statutory 12 lives norms of IRDA (and here the benefit is of the agent and not yours) and it can no way compete with the traditionally available Mediclaim policies.

The company has creatively named it First Care, but frankly, would the policy really provide any care – first, second or otherwise – is a big question mark?!

[Disclaimer - The views expressed in the articles are that of the author and the blog owner or the blog may or may not fully or partially subscribe to it. The blog or the owner do not take any guarantee or responsibility for any facts, figures or findings provided in the article. This review is meant for academic purposes only and not meant to malign,downsize or hurt any product, organization or individual. The blog or the owner will not be responsible or liable for any reactions whatsoever Please read product brochures/website/information sources for more details about the product.It is strongly recommended to make your own decision regarding the product; the author, the blog or the owner will not be held responsible or liable for any loss - material, financial or any other!]

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