Surviving Surgeries financially through Surgical Assistance Insurance

The trauma of surgery is bad; the trauma of not having the money to pay for it is worse. Surgical assistance insurance could be a solution here

Seema had gone through the traumatic experience of her husband Bhushan’s heart surgery. Her husband had taken a critical illness insurance and that had saved the day, for them.
Seema realized after understanding about Critical Illness Insurance policies, that they are going to cover just a few illnesses. Surgical Assistance Insurance policies however cover a lot more surgical situations and she felt could be more useful for them.
Surgical illness insurance provides a payment in a situation where a surgery needs to be done, provided that is covered by the policy/ rider. This policy specifies the surgeries it specifically covers. Most policies here are of the non-indemnity type, where a certain sum of money will be paid out irrespective of the amount spent.
Let us look at the salient features of these kinds of products -
• Policy covers specific surgical conditions which are clearly enumerated, at the outset – less than 100 to about 1000 surgeries covered, which varies with the policy. Premium varies to a great extent, due to this.
• Policies can be stand alone from Life/ General insurance companies or riders that could be attached to life insurance policies. All policies/ riders of this type, were from Life Insurance companies.
• There is tremendous amount of variation in the number of surgeries covered, coverage tenure, Sum Assured permitted & benefits. Some policies cover upto a specific term; others cover upto a particular age or even a combination of the two.
• In some of the cases, the Sum Assured increases by a specific percentage ( 5% in two instances ) till it reaches 150% of the initial Sum Assured chosen. In other cases, it remains static throughout.
• Policies here are mostly the non-indemnity ( a specified amount is paid as per policy terms ) kind.
• Surgeries are generally classified by the complexity as Grade 1,2,3,4 etc. The more serious the surgery, the higher will be the charges. In case of lumpsum payouts, it will be higher for a more complicated surgery. For instance, it will be more for an open-heart surgery as compared to Hernia.
• Some policies also give a daily hospital benefit upto a certain number of days of stay in the hospital. Similarly, ICU charges are also paid for a certain number of days, in certain policies.
• Some policies give convalescence benefit if the patient has spent at least a certain number of days, in the hospital.
• There are exclusions as well. Surgeries traceable to pre-existing illnesses, within waiting period, surgeries of a cosmetic nature not necessitated by an accidental injury etc. will not be covered.
• Sec 80D benefit available upto Rs.15,000/- on premiums paid against this policy.

Analysis & deliberation

This class of policy is again a good to have additional policy, over and above the regular Medical Insurance, which is because it covers only specified surgeries and not general hospitalization. Hence, this should be considered after a medical insurance is in place. Again, as opposed to a critical illness policy ( most of which will involve some surgery ), a surgical assistance policy will typically be costlier as the number of surgeries covered is much wider. When evaluating this class of policy, it is necessary to look at the premiums as also the number of surgeries covered – for this varies in a wide range – from less than 100 to about 1000. Higher the coverage, higher the premium would be. Also some policies impose a condition that in a lifetime, one could claim upto 3 times the Sum Assured. Others have some other overall limits upto which claims will be accepted in a year & during the policy tenure. One hence needs to consider all these properly and then decide on one that is suitable.

Some policies & riders in this space –

What is given below is just a synopsis of the plans. There will be a lot of conditions & exclusions, which one needs to go through carefully before zeroing in on the one that is suitable. The following is just a representative sample.

HDFC Surgical Care Plan – A standalone policy from HDFC Std Life. A non-indemnity policy available with and without Hospital Cash benefits. 82 surgeries covered, divided into Grade A to D. Payout depends on the Grade of Surgery. Maximum claim during the lifetime of the policy – 300% of Sum Assured. Sum assured increases by 5% y-o-y.

ICICI Pru Hospital Care – A standalone policy From ICICI Pru Life Insurance. A non-indemnity policy with daily hospitalization cash benefits, ICU Benefits, Recuperation Benefits ( if applicable ) & Surgical assistance. Over 900 surgeries graded from 1 – 4 are covered. One can opt for Plan A to Plan D - total benefits during the lifetime are Rs.20 Lakhs to Rs.80 Lakhs respectively. Guaranteed Coverage during the tenure, irrespective of claims.

Tata AIG Surgical Benefit Rider – A rider that can be attached to two of the company’s products – Invest Assure Health & Invest Assure Flexi. Sum Assured can be between Rs.40,000 to Rs.3 Lakhs. Lumpsum payment based on the surgery category – Grade 1 to 5. 946 surgeries are covered. 5% increase in Sum Assured y-o-y.

After hearing this out Seema definitely felt that they would have been better served with a Surgical Assistance policy. But the moot point is, how many policies can one take? There will always be some residual risk that will be with the insured. As long as bulk of the risk has been farmed out, it should be fine. For, there is a life to live and expenses beyond premiums. Seema nodded.

Published in DNA Money on 8/10/09