Decoding Health Insurance in India

 

Ever since independence, the Indian government has made the healthcare industry one of its priorities. This, along with an increase in average income levels and life expectancy has led to rapid progress in the industry. At the same time, the health insurance industry has also been growing, although at a slightly slower pace. To give readers an idea of the current state of the health insurance sector, Subrat Mohanty, Senior Executive Vice President, HDFC Life, and Antony Jacob, CEO, Apollo Munich Health Insurance, participate in a live panel discussion with Vivek Law, Founder, The MoneyMile.

Millennials and Health Insurance

Even though the penetration of health insurance in India has been traditionally low, it is picking up thanks to increased incomes and more awareness amongst the public. People, especially those under the age of 30, have become health conscious and are monitoring their fitness more carefully. According to Subrat Mohanty, "Millennials are now becoming a big chunk of health insurance consumers". Risk perception is fairly low in India, but these millennials are leaving the invincible stage of their life. They are also looking for financial stability, and because healthcare costs are rising, they are seeking insurance that provides assistance with potential medical expenses without busting their monthly budgets or bankrupting them.

Why Buy Health Insurance when Young?

According to Subrat Mohanty, millennials are also opting for health insurance because they have probably realised that it is smart to purchase such plans in their 20s. Health insurance premiums rise with age because the insurer takes into account the higher risk of disease that increased age brings. Chronic health conditions like high blood pressure tend to show up later on in life "typically after age 30. He says, "With very few exceptions, the younger you are when you buy health insurance, the lesser you will pay on premiums".

Health Insurance for Pre-existing Illnesses

The health insurance sector has also got a boost thanks to the constant innovations that has helped it address a variety of consumer needs. A major change that has come up in this sector is that pre-existing diseases are being covered too. Antony Jacob says, "There was a time when people suffering from chronic non-communicable diseases like diabetes were declined a health cover. Today, there are insurers offering coverage for these illnesses". Such ailments are usually paid for by the policy after a specific duration, known as the waiting period. During the time, medical costs arising due to issues with the pre-existing illness may not be covered, but all other costs for other illnesses will be taken care of by the policy. 

The Emergence of Single Disease Covers

Health insurance companies have also started offering disease-specific plans to customers, points out Subrat Mohanty. Such policies provide comprehensive coverage for that particular ailment and function as an add-on cover to the usual health insurance plan. So if a mediclaim policy is limited to hospitalisation costs, a disease-specific health insurance policy provides a cover beyond in-patient hospitalisation. And apart from the cost of treatment that has spiralled over the years, the rising popularity of such plans, he explains, is also rooted in the high rate of occurrence of those diseases. Take the instance of HDFC Life Cancer Care plan. He states, "When HDFC Life Cancer Care was launched, most of the purchases were initially driven by people who had witnessed someone in their circle being diagnosed with cancer".

Reducing the Premium Load despite Rising Health Costs

Antony Jacob points out that even though rising medical costs still pose a serious concern, there are some insurance companies that are thinking of ways to reduce the load of health insurance premiums on customers. He cites the Health Wallet plan of Apollo Munich Health Insurance as an example, and explains, "The policy comes with a 'reserve' benefit on specific out-of-pocket expenses. The unused reserve amount is carried forward every year and earns a 6 per cent bonus". After a pre-specified number of continuous renewals, this accumulated reserve can be utilised to pay for up to 50 per cent of the renewal premiums.

Are Group Health Covers Enough?

While there have been many improvements in this industry, there are a fair number of people who are still not opting for health insurance benefits. Antony Jacob says, "People need to understand that accidents and medical emergencies can happen without warning, and at any age. A good health policy will make sure that they are sufficiently covered for such scenarios".

Then there are people who do not pay much attention to having an adequate insurance cover. An apt example would be of professionals who believe that the group health insurance cover that they receive from their employer is sufficient. But the free coverage probably may not be enough for them if they have a spouse or children. There's also another downside - the coverage ends upon quitting the job.

When Life Meets Health

Then there are those who often buy life insurance but not health insurance, or vice versa, because they find the individual purchase and check-up procedures for each policy a bit cumbersome. Fortunately, we have gotten to a stage where customers can opt for both life and health coverage under a single policy, explains Subrat Mohanty. Enter 'Click2Protect Health plan', a joint venture by HDFC Life Insurance and Apollo Munich Health. A single application and just one medical test is enough for applicants to purchase this policy, which offers both life and health insurance benefits.

This live panel discussion featuring Subrat Mohanty and Antony Jacob was conducted as part of The MoneyMile's 'Insurance Decoded' series.