Low-cost medical insurance

Looking for medical insurance? Your good old neighbourhood public sector bank might have an inexpensive solution for your family, including your aged parents. Banks such as Punjab National Bank, Bank of Baroda, Bank Of India, OBC, Corporation Bank, Andhra Bank and Indian Bank market medical insurance policies of public sector insurers, which are available at a fraction of what an equivalent cover would cost elsewhere.

These banks have tie-ups with United India Insurance, Oriental Insurance, National Insurance and New India Assurance.

The policies work mostly like any group medical cover. Low premiums, high entry age and largely no medical checkups at the time of enrolment are the key features of these policies.

But before taking the plunge, check out the shortcomings of these offerings.

These are ideally suited for elders who don't otherwise have a medical policy.

All the banks that sell these medical policies require you to have a savings account with them. While Indian Bank offers coverage up to ₹10 lakh, the sum insured generally ranges from ₹1-5 lakh in most other places.

There are several advantages of bank-driven medical insurance policies. They have a very high entry age.

The policies from PNB, OBC and Indian Bank, for example, can be taken by those up to the age of 79-80 years.

But the general entry age is around 60-65 years for most of the other banks and renewal is allowed till the insured turns 80.

Most banks do not require you to take a medical test unless you are over 65.

These medical policy premiums are inexpensive. While policies sold by PNB and OBC offer a flat rate across age groups, others sold by Bank of Baroda, Bank of India and Corporation Bank charge premiums based on age.

For a sum assured of ₹5 lakh, the premium ranges from ₹6,800-7,100 per annum for those less than 65.

This rate goes up to ₹8,900-11,000 per annum for those who are in the 65-80 age band.

These policies can be taken for the whole family as a floater policy along with your spouse and dependent children.

Many of these policies allow you to add parents as beneficiaries as well.

So these rates are attractive when viewed from the point of view of covering elders. A ₹5 lakh medical policy taken for a senior citizen, for example, would cost nearly four times more if taken individually from private or even from public sector insurance companies.

These insurance policies offer cashless treatment at network hospitals and coverage of pre-existing illnesses after a waiting period, usually of 2-3 years.

But before you rush to take a cover, be aware of the limitations and use it in such a way that it works well for you.

The association of the bank with the insurance company is subject to periodic reviews and it may so happen that ties could be severed.

Next, the premiums are subject to increase, especially if the claims start to increase.

Also, there could be loading on premiums beyond the age of 65-70 years. The insurance company could also insist on co-payment at a later date.

The other problem may be that claims may be tedious, as the bank’s responsibility ends with acting as an agent to sell the insurance policy.

Working with the third party administrator to settle claims does require constant follow-up and monitoring.

The best strategy if you are in the 35-55 year age band is to opt for a regular medical policy from a public or private insurance company and use this policy to cover your aged parents, if they don’t have an insurance cover.

Finally, if you are a senior citizen with no medical cover and find the premiums for regular insurance policies are high, a bank-marketed insurance policy can be a suitable option for you.

Tax benefits under Section 80D of the Income Tax Act are also available for medical policies taken through this route.

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