Health insurance cover is fast catching up to the status enjoyed by life and motor insurance nowadays, especially given the growing number of people diagnosed with lifestyle diseases. With the cost of medical care ever increasing, getting quality medical aid is becoming prohibitively expensive and many Indians are now investing in health insurance policies as a way to offset this cost.
While there are a number of public as well as private health insurers in the market offering comprehensive policies, another sector is slowly emerging as an alternative to the insurance companies- banks. While this might seem surprising, the overlap between the banking field and insurance has been present for a while now, with nationalised banks offering their account holders a range of insurance options.
So with both banks and insurance companies competing for policyholders, do the banks match up when it comes to their health insurance policies?
Type of Health Insurance Offered:
The health insurance plans offered by banks tend to be tie-ups with insurance companies, resulting in the bank being the intermediary. Insurance companies generally design special policies for the bank’s customers based on a prior agreement between the two parties.
Thus, the policies are inflexible and generally tend to be group health insurance policies with few options to choose from. These policies are also exclusive to the bank’s account holders, meaning the policy would have to be terminated if the customer decides to close his/her account with the bank for any reason.
The premium amounts for bank sold health insurance policies tend to attract customers due to their low premiums. Premiums for health insurance policies sold by nationalised banks tend to be very low compared to both private as well as state-owned insurance companies, especially for group cover policies. However, policyholders should always check the cover offered by the particular and see if it meets their individual requirements.
Factors that Influence Premium:
When buying a health insurance policy, most insurers would calculate the premium based on the policyholder’s age and other factors like his/her general health. However, health insurance sold by banks does not take age into account when premium calculations are done, making it more affordable for senior citizens.
All health insurance providers mandate a slew of medical tests before the policy is issued, to determine the policyholder’s general health and any specific illnesses or susceptibility to illnesses he/she may have. This also drives up the price of the health insurance, since this money is recovered from the policyholder through higher premiums. Policies sold by banks, however, do not mandate a medical test as part of their policy terms.
Lower Premiums for Senior Citizens:
Generally health insurance policies are more expensive as the policyholder gets older. This is because of the added risks and chances of the policyholder getting ill. However, when compared to insurance companies’ health insurance policies, the ones sold by banks are cheaper for senior citizens because they do not take the policyholder’s age into account for most cases.
The difference in premium amount is seen most after the age of 50 years, when the premiums increase exponentially in the case of insurance company sold plans.
This makes bank sold health insurance a good choice for senior citizens due to the lower premium.
Policyholders who hold a bank account and choose to buy a health insurance policy from the bank can choose to portability to the insurance company who have tied up with the bank to offer the policy, if they desire. This makes these policies more attractive as policyholders can always opt to port if they are not happy with the coverage offered by the bank sold insurance policy.
Most bank sold health policies offer policyholders the option to increase their health cover through additional covers, which can be added on to their primary policy. In this way, policyholders can choose to as and when they require it by simply purchasing additional protection.
A number of health insurance policies offered by banks have low entry ages, making it difficult to renew the plans, especially for policyholders who buy the policy later in life.
In the event the policy is discontinued due to the partnership between the bank and the insurance company part ways, policyholders would be left in the lurch.
In conclusion, there are many advantages to buying a health insurance policy issued by a bank, with one of them being the lowered premiums. However, there are also some downsides to buying these policies, such as the lowered entry age and difficulty in renewing an existing policy.
GST rate of 18% applicable for all financial services effective July 1, 2017.
Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.