New Health Savings Plan by IRDA - How it Works

The Insurance Regulatory and Development Authority of India (IRDA) has come up with a new health insurance product to speed up the penetration of health insurance in India. The product will be launched soon in the insurance market. The product is expected to cater to the needs of the people living in rural and semi-urban areas. 

Normally, two options are available for a person who wants to buy a health insurance cover.  Either he/she can opt for an indemnity plan or for a critical illness cover. An indemnity plan covers hospitalization expense of the policyholder while a critical illness plan provides cover against the treatment of particular critical illnesses mentioned in the policy. A critical illness cover repays the sum assured to the policyholder who can use it for a variety of purposes. 

New health savings plan suggested by IRDA:

The new health savings plan designed by IRDA carries the same features that an endowment life insurance plan has. However, the only difference both is that the cover offered by the new health insurance policy can be used only for covering medical expense. Also, this new plan will come with a savings component which makes it different from regular insurance plans. The plan will provide cover only for health related expenses. The policyholder will get an account with this plan wherein he/ she can save money for future medical expenses. 

The suggested health savings account will provide interest on your savings. However, you cannot use this account like your normal savings bank account. For this health savings account, premiums will be divided into three components.  The first component of premium will be for risk charges for health insurance, the second component will be for expenditures, and the third will be for savings component. You will be able to renew the health insurance cover offered by the plan. However, the risk charges may vary at renewals. Premiums paid under this health insurance plan will be exempted from income tax under section 80D of the Indian Income Tax Act. You can get tax exemption up to Rs. 20,000 every year.

The plan will help you save and get cover for your medical expenses. The investments made by you with this plan will grow over the years, and you will be allowed to withdraw your savings at maturity. However, you will be allowed to withdraw savings only to meet your medical expenses. 

Risk coverage by the plan: 

The plan will basically function like a top up plan. For example, if you have a health cover of Rs. 3, 00,000, and you exceed that amount, the plan will provide you with extra cover.  Also, the insurance provider may choose to provide cover for specific critical illnesses which are not covered by regular health insurance policies. 

Know the charges: 

This new health insurance savings plan requires a minimum investment of Rs. 25,000.  The plan is likely to have a three-year lock in period. Also, 15% of your annual premium will be paid as agent commission in the first year. Going forward, it will be 10% in the second year and 5 % in the third, fourth and fifth years.

No doubt, this new health savings plan will help you save money for your emergency medical expenses. But, there are a few limitations which we cannot overlook. Firstly, the savings done through this plan could be used only for medical emergencies.  Secondly, as the minimum premium charged by this plan is Rs. 25,000, it will be difficult for common people to afford and reap the benefits of this new health insurance plan. Compared to what you pay for a regular health insurance plan, this new health insurance is expensive. With a regular health insurance plan, you can get coverage up to Rs. 5, 00,000 by paying an annual premium of Rs.5,000.

Is Being Covered by Your Employer’s Health Insurance Enough?

Most of us don’t take health insurance because our employer covers us under group insurance policies resulting in gratuity. In fact, most of us are also unaware of the extent of the coverage provided by the group health insurance provided by our employers. What happens if we have to pay out of our own pockets in order to cover our medical bills entirely?

Advantages and disadvantages of employer’s health insurance

Before we get ahead of ourselves, let us understand the ups and downs of relying entirely on the health insurance provided by our employers.

• We receive the insurance provided by our employers at much lower premiums than individual health insurance policies. Not just that, the health insurance coverage provided by our employers is available to us without any restrictions. 
• Added to that, group health insurance policies do not have strict restrictions on persons with past medical histories. Even age is not a barrier to get a group health insurance plan under our employers.

That said, the cons of depending on our employer’s health insurance policy alone outplay the pros.

• Our health insurance, under our employer’s master policy, is only valid as long as we are still under their employment.
• We are not covered under any policy in the instance that we are between jobs. Our family is open to risk as long as we are not employed with an organisation.
• Furthermore, if the organisation fails to make premium payments, the health insurance policy can be voided.
• Since the health insurance provided by employers comes under group insurance plans, they tend to offer limited coverage. These policies are designed to cover all of the employees employed with the organization, hence may heed to sub-limits under various heads.

When our employer’s health insurance plan is not enough

What happens when we are faced with certain unfavorable conditions, wherein, the health insurance plans availed under group health schemes may not provide adequate coverage?

What’s more is that a new breed of companies that are springing up are withdrawing from caring for elder parents of their employees. Where does this leave our parents when we are away working towards our futures?

Important riders under the categories of pre and post illness costs such as doctor’s fees, nursing care, ambulance charges, daily cash allowances, diagnostic tests, etc. may not be provided under the health insurance policies provided by most employers. These expenses amount to a large sum during a medical emergency.

Premiums on post-retirement health insurance policies are usually very high. A person needs health insurance most pressingly in the waning post retirement years. Employers offer health insurance for the younger years of our lives when most of us are at our health’s peak.

What could be an all-round solution?

To supplement our employer’s health insurance policies, we must opt for an individual or floater health insurance policy. Individual health insurance policies can be customized to suit the variant needs of different individuals of a single organisation. They provide us with riders that fit our specific preferences. We could look into the various available options of top-ups, fixed benefit policies or even indemnity-based regular health insurance policies.

Example to explain:

Under the HDFC Ergo Health Suraksha policy, company assures us of no sub limits on the doctor’s fees, diseases, hospitals charges such as room rents, etc. Health Suraksha policy also provides coverage like in-patient treatments, hospitalisation costs, pre and post hospitalisation costs, check-ups and treatments.

All of this is provided to us at reasonable prices. HDFC Ergo Health Insurance attempts to administer comprehensive health insurance plans that fits every single one of our budgets.

Health Insurance now being Sold at a Park Near You

Almost every one of us know that a call from the number starting with 1409 is from our nagging neighbourhood telemarketers. Companies have realized that these calls are mostly ignored and therefore have started to visit the customers face to face during their morning walks in the park.

The national capital has already been a witness to such an even on a cold day where customers were warming up to the new approach in spite of the cold weather. While one of the marketing respondents was advising a customer about her obese weight and its long terms effects, Kotak Mahindra Bank was making its presence felt by showcasing their products.

Max Bupa took maximum opportunity in selling their insurance products all across the town at Lodhi Garden. In fact Kunal Sharma aged around 65 says that it is a common sight to see companies marketing their products during their morning walk these days. Companies too have had positive response to this new approach. A Bajaj Allianz representative says that customers are more willing to spare a few minutes during their morning walk as they are not distracted much when compared to dining out or at an amusement park.

Anika Agarwal, head of marketing at Max Bupa says that they are able to target customers easily as it is a known fact that people walk in the morning for good health. Max Bupa has started a fitness initiative in the name of Walk for Health to promote a healthy lifestyle. The company conducts regular mini events across various locations in the capital city which includes Lodhi Garden and Siri Fort besides other parts where they get most number of walkers. The company has noticed a steep rise in the number of people during the weekends as most walkers come with their families to enjoy the morning walk. The company has also set up kiosks and free health camps to get the customers attracted towards their products.

Delhi has always been a city of morning walkers with a lot of importance being given to the availability of parks but the new marketing bug is fast catching in the other parts of the country as well. For example, in Chennai morning walkers are liable to be approached by insurance agents to offer services like free health check-up and in the process try to sell their products.

The new approach would surely do well as customers are spoilt for choice and sometimes even confused to choose the right health insurance policy. The new approach would go a long way but only if company’s maintain the thin line between suggesting customers the best health insurance and nagging them to buy their products. In today’s busy schedule the last thing customer’s would expect is to someone annoy their only possible moment of having a peaceful time. As of now the companies are doing a good and hopefully keep it this way without turning the new approach into yet another sales pitch.

Related Video:

Watch out 5 simple steps for young couples to be financially stable.

5 Steps for Young Couples to be Financially Stable

You can hate it, you can love it but you cannot live without it. Yes, money is arguably one of the top requirements to survive in today’s world. However, everyone seems to make money but only few of them seem to be happy with the money they make. On deeper introspection you will find that the equation is not in making money but in managing money. As the saying goes, early bird catches the worm, similarly starting early is always a good way to manage money, not only do you have more time but also you can recover in case you make any wrong decisions as well.

Keeping this in mind, I have listed out five important steps which can be taken by young couples to be financially stable & be happy.

Credit : Flickr

Avoid Splurging

Everyone likes to spend money if they had enough money. Surely, money is not everything but it is definitely not wise to spend the money if you have an important bill to pay, or an EMI or a debt. Always before you spend the money do not assume that you will get that bonus or that profit you were expecting. Good days are not always here to stay and you could be in the doldrums anytime. So be 100% sure that the money you are spending is only for spending and it was not useful elsewhere. Take stock of your finances and if possible keep a separate amount for fun expenses.

Start Saving for Child

With today’s ever increasing costs raising kids no kid’s game and you got to clearly plan the expenses with respect to the future of your kids. Make sure you have saved enough money right from the medical expenses for the new born baby to the vaccinations and any other mandatory requirements for the baby like baby food, clothes, day care etc. This is not to make you feel like a miser but just to be wiser so that you don’t get off guard the next time you buy a baby powder and shocked that it costs more than your talcum powder. It always helps to be prepared and when you are prepared you always give a better performance. It only make sense as you do not want to give a stressed environment to the new born baby as well.

Go for Sufficient Life Cover

You always have to a plan B. Yes, in short who will take care of your family if something untoward happens to you? This is where you need to buy a life cover. Ideally life cover should be at least 20 times your annual income. You have to options you can go for term plans which are cheaper but give you higher coverage but do not return any profit or the premium paid as well. Make sure you know the maximum age till which your term plans cover. Term plans do not cover till the person dies after old age. All of them have age limit, mostly up to 75 years of age. On the other hand you have endowment life insurance plans which cost much higher but give you coverage till the participant is deceased or even at the maturity of the plan. So see which plan is better to you and choose accordingly.

Purchase a House if EMI below 40% of Income


Most probably sooner or later everyone likes to own a house for two reasons. One is stop paying rent etc. for the accommodation and the other is to have a stability in life in case you are going to stay, work and live in the same place. Going for home loans is a good option because you need to invest all the savings for your new home, you also get tax rebates, you only pay small EMIs and sooner or later the property you purchased is an asset. Ideally banks too would issue home loans based on 40% of your income. This ensures you have enough money for other expenses.

Get the Right Health Plan

Health is wealth. However, with today’s high cost medical facilities the saying only becomes stronger. Having a good health insurance saves you from sudden high expenses in case of a sudden health problem and also keeps you financially safe.

7 Myths Uncovered About Health Insurance

Health insurance is highly recommended for our lives which are subjected to a number of lifestyle diseases. Expenses on health care can be immense and having an insurance policy eases some of the burden. However, there are many myths associated with a mediclaim policy which deters people from buying it.
Here are the top 7 myths that have been busted about health insurance policies in India.



Health Insurance Myths

Pre-existence of diseases

Most buyers worry about the pre-existence of diseases when buying a health insurance policy. All mediclaim policies come with a clause of exclusion of pre-existing diseases. But once a certain period is completed, it will cover the disease as mention in your health policy. Moreover, if you are completely fit at the time of purchasing the mediclaim policy, then this clause is non-applicable for you.

Cashless treatment for admittance

Cashless treatment seems to be the answer for all treatments under health policy in India. It is a common myth of health insurance which doesn’t work always. The hospital where you are being admitted has to be in the list of the health insurance provider to get cashless facility. Unless the hospital is in that list, you cannot be admitted cashless, but can claim reimbursement.

Moreover, not every hospital has an insurance desk which is functional at all hours of the day. If your time of admittance does not coincide with the working hours of the desk, then you may have to pay up for admission.

Exclusion of pregnancy

One of the largest myths of health insurance is that it doesn’t cover pregnancy. However, nowadays some insurers cover pregnancy. There may be a few additional clauses to this claim such as a waiting period of 3 years or cover for the first pregnancy. Nonetheless, pregnancies are now covered albeit conditionally.

Hospitalization for 24 hours

To claim health insurance, you need not be admitted to a hospital but not necessarily for 24 hours. A lot of advisors and buyers mistake this and insist upon staying in the hospital for a day. Unless mentioned in certain terms, this is a myth of health insurance that has risen because of cloudiness in understanding rules. Certain procedures such as cataract operations and day care processes (if included) often do not require 24 hours of hospitalization but they can be claimed if they are listed in your policy. Some dental treatments are also eligible for cover under a health insurance plan (if it is specifically listed).

Room rent is covered

It is a myth to consider that all health insurance policies cover room rent expenses. Only some policies cover room rent and you will have choose a plan that covers room rent. Capping on the rental rate of rooms is equivalent to the premium payable. Also for plans covering room rent, there are some limitations also.

Health insurance is just a tax saving instrument

Most healthcare expenses can cripple your financial planning for the year severely. You should buy health insurance solely for the purpose of securing your family financially against massive healthcare expenses. However, it is fallacious to buy the policy for tax benefits under section 80D. If you invest wisely, it can prove to be more than that. So make maximum use of it

No changes can be made into the policy I bought

The terms of your health insurance can be changed if there is a mind-set change. Add on covers, Extensions, adding members, etc can be in the middle of the policy tenure also.

There are several presumptions that people derive after seeing one or two policy documents, but in reality certain things actually exists, what we think as a myth. As discussed above, many health insurance companies actually delivers day care expenses cover, maternity benefits, pre-existing diseases and lots more, that we usually consider as a myth. Once we’ll not go through a policy document we cannot derive an actual sense of it.

"Think before you perceive things"- the real world is not always as we see it.
Go for a health insurance and secure your future from the financial crisis that may make a landfall on your savings account in terms of your growing health attention!

P.S : ‘Read the policy document carefully to clear off all your myths before actually signing your policy’.

Home Insurance, Protecting Your Fortress

A man's residence is his fortress, it is the area you and your household reside in, it is your household's inheritance. Safeguarding it is not just vital but necessary for your comfort and protection. Right here you will find important information that will help you select exactly what residence insurance coverage you want to get and the insurance coverage you will require. As with any sort of kind of insurance plan, take the time to go over every little thing and ask all the questions you desire just before authorizing it.



House insurance coverage describes the protection and security of a personal residence. It is trivial if you stay in a high rise apartment or in a ranch somewhere, in an isle or in the city. It depends on you to choose exactly what you intend to cover with your plan and the amount you need to pay will certainly depend on the place and problem your house is in. If your residence is located in a location where there is a great deal of unlawful act and break-ins, you could need to pay more than typical for burglary and vandalism defense. If you are electric system is not in excellent shape, the insurance coverage firm will certainly charge you much more for fire security or will certainly ask you to repair it just before covering you.



Obviously there are things that profit you and lower the costs depending on the area in which you live. As an example if you survive the seaside and your place has typhoon shutters, will certainly assist reduce your premium. A residence with an authorized alarm system or an automated fire extinguishing system will also being a far better fee than one without them. When it was developed, the materials made use of to construct it and the sort of surface it is built on are also aspects the insurance policy business will consider to offer you a home insurance coverage.



When you acquire your first house it is regular that the bank financing you the cash to make the purchase calls for that you acquire a house insurance coverage that will cover at the very least the amount that they lent you to buy it. The financial institution is keeping an eye out for its own interests, not yours so when you do purchase your first residence via a mortgage make sure that you being good enough insurance coverage to protect yourself as well. Several financial institutions will certainly provide you a home insurance coverage to authorize when they are ready to offer you the loan, go over it and discover exactly what is in it for you in case something occurs and your residence is ruined or harmed. If you are not secured, being them to change the plan prior to authorizing it.



There are various sort of insurance coverage which go from an HO0 group which covers damages from fire, smoke, lightning, surge and others which are extremely general, approximately an HO5 group which covers most anything that can take place to your house. An HO5 residence insurance plan will certainly cover every little thing with the exception of items particularly discussed in it, some of the items most insurance policy business will certainly not cover are floods, quakes and termite damages. Be cautious just since you purchase this group of home insurance policy, it does not imply you are covered, the plan you purchase needs to information specifically just what is and is not covered.



A home insurance policy might consist of much more points than the real home, it could feature private property inside the house and home, liabilities you might have due to mishaps or problems to 3rd party property within your residential property and affordable repair service expenses. It is additionally possible to include insurance coverage that will certainly cover your living expenses  in case your residence is destroyed and you have to move elsewhere while it is taken care of or rebuilt. This may be handy specifically if you reside in an area where organic disasters may occur or occur frequently. The bills will accumulate really quick if you need to pay for repair works and at the same time pay lease elsewhere. Also obligation insurance coverage inside the home is a wonderful concept given that you do not know when a person will slide and fall in your wet entrance and you will need to pay for healthcare. Home insurance coverage will certainly cover this also.



Again check out and recognize the documents just before signing and paying your premium, take the time to find a credible insurance policy business that will offer you with all the perks you wish and need. Protecting your home is imperative to protect your family, construction and repair work costs are quite high today, a lot more than when you constructed your place and anything could occur at any time. A house insurance coverage plan is a contract through which the insurance company ensures to place you bring you back to the state you were in just before you experienced the losses. That indicates your house will be rebuilt or corrected to the exact same disorder, or far better compared to it had just before the loss. Take the time to obtain this done and out of the way, avoidance is consistently the way to go.

Things you should know about business insurance

Before you take out an insurance policy for your business, take care of these things.

It is worthwhile asking your competitors which insurance agency and broker they use. When you take out insurance with someone, you want to be sure that they have experience in insuring people in your field. They may even know better than you about the risks and challenges your business faces. The last thing you want is to be paying your insurance company for years and years and then encounter a disaster that you aren't insured against.

Don't confuse risk management with insurance, they aren't the same thing.

Use a broker to get the best deal.

You can often include your own and your workers' health insurance on your business insurance policy. This could save you a lot of money.

Think very carefully about the risks that your business faces and discuss them with other people in the company before you take out insurance. Business interruption insurance, liability, and equipment are all essential.