Stocking ammunition to fight the crab

Normal hospitalisation and cancer benefit policies can be a good combo

Through the past year, many illnesses have gone undiagnosed and untreated. They have to rear their heads at some point and so, a health check-up and health insurance check-up would be wise.

The fourth of February was World Cancer Day. Life Insurance Corporation of India (LIC) unveiled a specialised cancer policy. It’s a cue we ought not to ignore.

LIC’s Cancer Cover is a benefit policy. It has lump-sum claim payouts, a monthly benefit payout and also, a premium waiver once a claim becomes payable.

Why a cancer-specific policy? Isn’t my hospitalisation policy enough to cover cancer? Yes, and no. Provided I have sufficient coverage, it can indeed pay for cancer-related hospitalisation.

Prolonged expenditure

But those claims will eat into coverage for other health events, and we all know cancer is both a large and a prolonged expense. So, if your intention is to insure against cancer expenses you should consider multi-layer cover.

Health insurance is of two kinds. Indemnity policies are annual policies that reimburse your hospitalisation bills and you are entitled to lifelong renewal. Benefit policies pay a flat sum of money on diagnosis of a specified disease and terminate after that.

An indemnity policy is usually given by a general insurance company and a benefit policy by a life insurance company. Each has its advantages. Combined well, they cushion you better financially.

A normal hospitalisation policy with a cancer benefit policy is a good combination to have. The former pays your bills and the latter supports you for the numerous expenses that are not covered under the former, including due to insufficient sum insured under the former.

Add to this combo a cancer-specific indemnity policy and you are better covered. For all three policies there are several options available from the more than 55 insurance companies in India.

Coming to the new policy, LIC Cancer Cover is a 10 to 30-year policy with ₹5 lakh to ₹50 lakh cover. Claims can be triggered by diagnosis of early-stage and major-stage cancer.

Monthly-benefit payout

There is a monthly benefit payout with premium waiver benefit also.

The former, at the rate of 1% of the sum insured per month, is guaranteed for 10 years irrespective of the policy term and even if the insured dies. Premium waiver is for three years for early-stage cancer and for life in the case of major-stage cancer.

It is costlier than cancer-indemnity policies. For a quick example, the premium for a 45-year old for ₹15 lakh cover is about ₹4,000 a year for New India’s Cancer Guard while for LIC Cancer Cover it is about ₹7,500.

We are comparing apples and oranges here because of the additional features in the latter though it has a time limit on its coverage compared to the former.

Where both the policies are disappointingly similar — and this applies to many policies in the market — is the very low sum insured available for senior citizens.

As much as ₹5 lakh for the age band 60 to 65 is close to nothing, leading to bitter complaints that those most in need of insurance are offered the least coverage.

(The writer is a business journalist specialising in insurance & corporate history)

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