At a time when the ULIP market is in turmoil, IndiaFirst has launched its health ULIP. Mediclaim cashless approval is normally a huge problem, especially with government insurers. Will IndiaFirst’s tech-savvy approach for cashless approval work without the policyholder having to make a call or send a fax or email to the TPA?

IndiaFirst Health ULIP-Money Back health insurance plan is a long term savings-cum-indemnity health insurance plan for 5 or 10 years. There will be a 4-year waiting period for pre-existing diseases (PED) just like a mediclaim policy. The unique feature is its tech-savvy approach to the major pain point in the mediclaim- cashless approval process. Policyholders have found difficulty in communication with government insurers' Third Party Administrators (TPAs) via phone, fax or email to get cashless approval.

The Money Back health insurance plan will offer cashless facilities at 4,956 network hospitals. According to Dr Nandagopal, chief executive officer and managing director of IndiaFirst, "The customer need not go to the TPA or send a fax. Once he swipes the card, the authorisation immediately happens. Again when he gets discharged from the hospital, he would need to swipe it and the hospital gets the money through the MasterCard service network, bypassing the entire documentation that is otherwise required and makes the whole process hassle-free."

According to a company official, "The TPA will get informed about the policyholder's arrival in the hospital after the card is swiped through the same machine which is used for credit/debit cards. The TPA will then get in touch with the hospital to find out details of the medical treatment and then approve the cashless claim in case the policyholder is eligible for it."

The minimum premium payout of the customer would be Rs10,000 for a regular premium or Rs30,000 for single premium. The health insurance cover would be a minimum of Rs1.50 lakh and a maximum of Rs10 lakh. The regular premium option has a policy term of 10 years, while the single premium option has a policy term of 5 years.

It offers a family floater option to include spouse, maximum of two children and maximum two parents of primary life assured. The maximum age at end of policy term is 70 years for primary life assured, 75 years for spouse & parents and 25 years for children.

Part of the premium goes towards morbidity charges to provide health benefit. The yearly morbidity charge for persons between 26 to 30 years for Rs5 lakh sum assured will be Rs5,941. There are no mortality charges as there is no life cover. The remaining part of the premium is invested in one or more of five fund options with varying percent of equity, debt and money market exposure. The performance of the fund option will be reflected in the fund value of the policy.

Advantages

•  Under Section 80D you can enjoy tax benefits on the morbidity charge you pay and also get a benefit under Section 80C for premium contribution allocated towards your market linked fund.
•  The tech approach for cashless claims should be of major use, if it is free of all hassles.
•  A holder can create health savings fund with dual approach of health insurance plus savings.

Disadvantages

•  The cost of health cover will be guaranteed for the first year and thereafter will be reviewed every year. This is similar to mediclaim where premiums can increase every year.
• High charges—The premium allocation and policy administration charge for regular premium option is expensive and it will be applied on total premium (which includes morbidity charges). Single premium option is relatively less expensive, but it only covers a five-year policy term.
•  The maximum cover during the plan term is restricted to 5 times the annual sum assured. This is the lifetime limit of the policy. It means that if you opt for a 10-year plan and exhaust 5 times the annual sum assured in claims, the policy terminates and fund value will be paid immediately.
•  Out-of-network hospitals will entail co-pay of 20%. The insurer will pay only 80% of the expenses.

Health ULIPs are a relatively new concept. When Moneylife asked the company official about the reason for not launching standalone health insurance product, he replied, "Our expertise is in wealth management and at this time we want to have a product with combination of health insurance and savings. We have worked for over a year on this product as it needed ties with hospitals, TPAs and so on."

This health ULIP concept has its supporters. Ashvin Parekh, partner and national leader-Global Financial Services at Ernst & Young Pvt Ltd told Moneylife in an interview earlier this year, "Health indemnity too will gain importance, especially if it evolves into a managed care. Health ULIP will be a longer-term product than the annual renewal for mediclaim."

IndiaFirst recently launched 'LifeStore' which offers differentiation with a technology thrust to help aspects like increasing financial literacy, simplicity of product details, transparency of detailed investment performance and an online customer service experience similar to online banking. This 'Do-It-Yourself' website for understanding and buying insurance is certainly a step towards empowering customers and taking insurance benefits literally to their homes.