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Will Arogya Sanjeevani take care of all your health insurance needs? Here are its pros and cons

AS is a basic health plan that offers a limited cover of Rs 1-5 lakh for one year, with the annual premium ranging from Rs 4,000 to Rs 7,500. It can be bought as an individual or a family floater plan.

, ET Bureau|
Last Updated: May 18, 2020, 10.23 AM IST
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Go through the pros and cons of the standardised health insurance plan to check if it suits your needs.
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Among the many learnings imparted by the coronavirus, perhaps the most relevant for India is the need for health insurance coverage. As the pandemic continues to rage, the dire health scenario has come to the fore: in a country where the average retail healthcare inflation has risen sharply from 4.39% in 2017-18 to 7.14% in 2018-19, as per the Economic Survey 2019, only 4.2 crore people, out of a 130 crore population, have retail health policies. This means that the out-of-pocket spends are a high 65% against a global average of 18%, as per the insurance regulator, Irdai.

This is the reason that, in recent years, the government and Irdai have tried to step in and correct the skew. The Ayushman Bharat Pradhan Mantri Jan Arogya Yojana was introduced in 2018, with the intention of providing free health coverage to the bottom 40% of the population, or 50 crore people. Last year, Irdai mandated the launch of Arogya Sanjeevani (AS), a low-cost product with a nominal cover and attractive features.

“The need for health insurance has always been there, but people have not bought it for various reasons, one being the complexity in the product itself,” says Pushan Mahapatra, MD & CEO, SBI General insurance. Besides the high premium and obscure terms and conditions in the fine print, there were other problems. “The traditional mindset was to procrastinate the purchase since it was not considered essential, not to mention the lack of accessibility,” says Bhabatosh Mishra, Director, Claims, Underwriting & Product, Max Bupa Health Insurance.

Many of these hurdles seem to have been taken care of with Arogya Sanjeevani, with clearance given to 29 general and health insurance companies to market the product. While 16 odd insurers have already brought out the product, mandated to be launched by 1 April 2020, others are set to follow suit soon. Does this mean you can buy Arogya Sanjeevani without a second thought and it will take care of all your health insurance needs?

Also read: Arogya is a simple product for first-time health cover buyers: P. Mahapatra, SBI General Insurance

What does it offer?
AS is a basic health plan that offers a limited cover of Rs 1-5 lakh for one year, with the annual premium ranging from Rs 4,000 to Rs 7,500 (see Snapshot...). It can be bought as an individual or a family floater plan, covering spouse, children, parents and parents-in-law.

The important thing is that the features, in terms of coverage, inclusions, exclusions, as well as the terms and conditions, remain the same across insurers. The premium, however, varies. This is because it is reflective of the costs associated with a plan: claims, management expenses and distribution costs incurred by the company. “Since the claims ratio, staff and servicing, growth and expansion, distribution across various demographies and regions is different for each company, the premium is bound to vary,” says Mishra. There is, however, no zone pricing in the plan, implying that the premium will remain the same across regions, whether the buyer is in a metro or a tier 3 city.

It does have a co-pay inclusion of 5%, which translates to the customer shelling out 5% of the sum insured from his pocket, while the rest of the cost is borne by the insurer. “Co-pay is introduced by the insurer to cover the risk of uncertainty about the customer profile, and is, in fact, low in case of AS,” says Prasun Sikdar, MD & CEO, ManipalCigna Health Insurance.

There is a waiting period of 30 days, but the coverage is wide, including treatment costs for coronavirus and other illnesses. It includes daycare treatments, Ayush and and modern treatments, besides dental and plastic surgery. There are, however, several restrictions and limitations in the coverage of some of these treatments.

Snapshot of Arogya Sanjeevani
A. Main features
  • Sum insured: Rs 1-5 lakh
  • Policy term: 1 year
  • Renewability: Lifelong
  • Eligibility: 18-65 years (dependent kids: 3 months to 25 years)
  • Co-pay: 5% of sum insured
  • No-claim bonus: 5-50% of “Arogya is essentially sum insured

B. What does it cover?
  • Hospitalisation Includes hospital room rent, boarding expenses, doctor fees, nursing expenses, operation theatre and ICU charges, surgeon, anaesthetist, medical practitioner, consultants, specialist fees, medicines used during hospital stay, road ambulance charges, pre- and posthospitalisation expenses.
  • Daycare treatments All daycare treatments are covered, but OPD is not.
  • Ayush treatments This covers inpatient care treatment under Ayurveda, Yoga and Naturopathy, Unani, Sidha and Homoeopathy.
  • Modern treatments Stem cell therapy, robotic surgeries, oral chemotherapy, balloon sinuplasty, intra vitreal injections, among others.
  • Dental & plastic surgery Only the treatments caused by an injury or a disease are covered.
  • Cataract Covered up to 25% of sum insured or Rs 40,000, whichever is lower, per eye.

C. Main exclusions
Diagnostic and investigative tests, Maternity expenses, OPD treatment, Cosmetic or plastic surgery, Obesity & weight control, Alcohol or drug abuse treatment, Rehabilitation, Change of gender treatment, Hazardous or adventure sports, Infertility and sterility


Benefits & drawbacks
While the plan seems to offer a good deal at a low cost, the market still has a lot of basic health plans that offer wide coverage and features. Should one discard those in favour of Arogya Sanjeevani? It is essential to consider the pros and cons before taking a final decision.

No confusion
“One of the biggest problems faced by buyers was that there were multiple insurance products offered by companies, with different sets of pricing in metros and non-metros, and with various add-ons. It led to a lot of confusion as to which product to buy,” says Gurdeep Singh Batra, Head, Retail Underwriting, Bajaj Allianz General Insurance.

“Besides, the fine print in the policy would typically surface only at the time of claim settlement,” says S. Brahmajosyula, Head, Underwriting, SBI General Insurance.

With Arogya, there is a high degree of clarity since the features, as well as terms, are standardised and remain the same across insurers. So one doesn’t need to compare and research for the best plan. If it meets one’s requirements, one can pick it depending on the premium that suits one’s budget.

Wide cover at low premium
To be able to get such a large set of treatments at a relatively low premium stands out as a distinct advantage. The premiums for similar basic health plans in the market are 20-50% more expensive, a huge difference for buyers.

Some of the latest treatments such as stem cell therapy and oral chemotherapy are covered, while dental and plastic surgery, even cataract surgery is insured, which are typically not covered by basic plans. Another attraction is the inclusion of alternative medicine treatments, such as homoeopathy and ayurveda. While most of these treatments are covered by other health plans, they usually come for a higher premium.

How much premium will you pay?

2-1
Individual: Cost of Rs 5 lakh cover for a 35-year-old male.
Family floater: 2 adults and 2 children, with the oldest member being 35 years old.
Premiums for all insurers could not be sourced. Data sourced from websites and companies.

Flexibility
The plan has other advantages like the option of paying premium in monthly, quarterly, semi-annual or annual instalments. It also offers to cover parents and parents-inlaw at a reasonable premium, which is typically offered by other plans for a much higher premium. Besides, it offers lifelong renewability, portability and the delivery of soft document copies to customers.

“The plan is quite reasonably priced, so one can easily buy a small individual cover at a young age. Later, with growth in family and income, one can port to a bigger, more comprehensive cover,” says Anand Roy, MD, Star Health and Allied Insurance.

Capping & limitations
Remember, however, that the low premium comes for a cost. The room rent sub-limit, which is typically 1% of the sum insured or nil in basic health plans is 2%of sum assured up to a maximum of Rs 5,000, and for ICU, it is 5%up to a maximum of Rs 10,000.

Similarly, modern treatments are covered up to 50% of the sum insured, while cataract surgery is covered up to 25% of sum insured or Rs 40,000 per eye. The dental and plastic surgery are covered only in case of an illness or accident. Many health plans that offer these facilities come without such limitations.

Another limitation is the size of the cover itself, which is capped at Rs 5 lakh. “In a metro, this amount is not adequate and a person would need at least Rs 10 lakh for health cover,” says Mishra. On the other hand, a co-pay of 5%of sum insured may be high for a person in a rural area. Besides, the no-claim bonus ranges from 5-50%, while several plans offer the option of 100% no-claim bonus.

Arogya Sanjeevani vs Basic health plans

2-2

Should you buy it?
Every insurance product is targeted at a specific audience and most experts are of the opinion that Arogya Sanjeevani is for the middle to low income population in tier 3/4 cities, or even rural areas. “The USP of the plan is that it is for the first-time buyers with low income in tier 3 or 4 cities who have no insurance visibility,” says Sikdar. Such a plan would work for this segment of population even with the various limitations and cappings. This is because the cost of hospitalisation in small towns and villages is much lower compared with that in metros or tier 1 cities. So even with a room rent limit of 2% or a 25% capping for cataract, the customer will be able to bear the hospital cost in smaller towns.

“On the other hand, even a 2-3 day hospitalisation in a metro or tier 1 city would result in heavy medical expenses, which cannot be taken care of by this plan,” says Sikdar. In fact, a buyer may end up paying 70% of the healthcare cost from his pocket. It would then defeat the purpose of buying a health insurance plan.

As for co-pay, since the plan is intended for the uninsured, it will be a step-up for them since they will now pay only 5% of the total hospitalisation cost compared with the 100%they were paying earlier. Besides this amount is typically higher, ranging from 10-30%, for other basic health plans.

However, some experts believe that the plan would even work for the younger, single, lower income population in metros because it is very affordable and will help them shoulder the basic hospitalisation costs to a large extent. “After all, how many people can afford to buy a `10 lakh plan even in metros,” asks Sikdar.

“It’s a good entry level plan even for people who have just graduated and are in their first jobs because it is standardised and doesn’t require too much research,” says Brahmajoysula. Later, if the buyer wants a more evolved plan and can pay a higher premium, he can easily port to other insurers.

So if you are in a metro or a tier 1 city and don’t want a small cover with limitations and cappings, you can avoid this plan and opt for a more comprehensive and evolved cover. Remember, however, that you will have to pay a premium that can be 20-50% higher than the premium for Arogya Sanjeevani.

If, on the other hand, the plan seems to fit your budget and needs, do not postpone buying it because, as Roy of Star Health says, “Health insurance is no longer a luxury but a necessity and this prodcut is a great way to enter insurance.”

So what you should you consider while buying a plan since the features are same for all insurers? Most experts agree that the things to consider are the company’s track and serviceability record, claim settlement history, premium, and hospital network. Make sure that the company has experience in selling the type of product that you are buying.

“Serviceability is a very important factor because you need to be sure that the company will stand by you during claim settlement,” says Batra. Adds Sikdar: “It’s also important to check how the company engages with you, how its officials explain the product or its terms and conditions to you, make an effort to keep in touch with you even after the sale of policy, or inform you about the changes.”

Given the current circumstances, also ensure that you will be able to conduct the entire transaction digitally.

Also Read

What are super top-up health insurance plans?

How to choose health insurance in times of coronavirus pandemic

Whom will Arogya Sanjeevani health insurance policy be suitable for?

What is Arogya Sanjeevani health insurance policy?

Renewal date for health insurance policies extended but will you be insured in this period?

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