Draft guidelines on health insurance issued in May 2012, has widened the definition of health insurance. As per the draft guidelines travel, personal accident and critical illness covers will fall under the health insurance segment. At present personal accident and critical illness covers comes under miscellaneous business.
As per draft guidelines, Health insurance business means the effecting of insurance contracts which provide for sickness benefits or medical, surgical or hospital expense benefits, travel health insurance and personal accident cover.
This may require the finance ministry to change the definition of health insurance under the health insurance act, as it does not include travel, critical illness and personal accident covers under health insurance.
Personal accident and critical illness covers ensure health related expenses; an international travel cover is largely health insurance as it is a mix of medical and travel-related cover.
Concern that insurers has raised with this change is that major health insurance norms like portability and lifetime renewability may be applicable to these covers as well, which may be very difficult for travel insurance, as it is a short term cover with a maximum policy term of six months.
Insurance Regulatory and Development Authority (IRDA) also wants that travel medical policies may be offered either as a stand-alone product or as an add-on covers to existing health policy as and when an existing policyholder travels.
At present travel, personal accident and critical illness indemnity covers are available only as stand alone covers, while benefit covers (issued by life insurers) can be bought as an add-on on term plans.
IRDA has also disallowed assigning health insurance policies to any one else whether indemnity or benefit based. This means you can’t link any of your general insurance policies to loan.
Many general insurers allow linking personal accident or critical illness cover under credit shield business that link it to home loan. Here, in case you lose your income due to accident or disability or any terminal decease, the policy proceeds takes care of the loan repayment.
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