List of key changes made in the health insurance regulations by the IRDAI
Rising medical costs and increasing awareness have convinced more and more people to buy health insurance policies. An increase in the sector led to the formation of a framework for the operation of health insurance products by the Insurance Regulatory and Development Authority of India (IRDAI) in 2013.
In view of the representations made by various stakeholders and other issues pertaining to the existing framework, IRDAI through a notification issued the health insurance regulations, 2016. Some of its salient features are:
Discounts and incentives for early buyers
Health conscious people who plan to buy a health insurance at an early age, when they are healthy and fit, will get an early bird discount. What’s more, if they maintain good health they will be entitled to incentives, which will be disclosed in the policy document.
These wellness benefits will be in the form of discounts in diagnosis, consultation and medicines across a network of hospitals and diagnostic centres. This initiative will further encourage people to opt for health insurance.
Pilot products
In an attempt to attract new customers and to offer innovative products, the IRDAI has allowed health insurance companies to offer pilot products for a maximum period of 5 years. After this period, these will become regular health insurance products.
However, if the pilot product is not feasible then the insurance company can discontinue the same. This initiative will result in innovative and attractive health insurance products in the coming years.
Introduction of credit or loan-linked health insurance
Unlike life insurance companies that offered term insurance based on existing credit or loan, health insurance companies did not offer any credit or loan-linked health insurance. However, the recent regulations have a provision for credit linked health insurance products as well.
Now a nominee can pay back the loan using claim amount if the policyholder becomes severely ill and is unable to repay the loan. Also, the term of such products has been extended from 1 year to a maximum of 5 years.
No commission to agents for portability option
If the buyer opts for portability option, then the insurance agent will not get any commission. However, the agent will continue to earn the commission when the same policy is renewed regularly.
Portability gives you the flexibility to change your insurer or your policy with the same insurer without losing accumulated benefits. In order to earn commission, agents might try to mis-sell you products. But, it is always better to opt for portability instead of buying new products.
Life insurance companies can't sell indemnity products
Health insurance policies are of two types, indemnity based and defined benefit based. Indemnity plans allow a customer to reimburse the medical expenses up to the sum insured in the plan. Whereas, defined benefit plans will pay the entire amount if a predefined disease occurs, such as critical illness plans.
As per the new health insurance regulations, life insurance companies will continue to offer defined benefit plans but they will no longer be able to sell indemnity plans.
The new health insurance regulations by IRDAI will boost sentiments in favour of health insurance and convince more and more people to opt them. It will also allow insurers to run pilot products that will pave ways for innovative products.
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