Page 162 - IC38 GENERAL INSURANCE

F. Fixed benefit covers - Hospital cash, critical illness

The greatest risk to an insurer in a health insurance policy is unnecessary and
unreasonable use of the policy benefits. Knowing that the patient is covered
under a health policy, doctors, surgeons and hospitals tend to over treat him.
They prolong the length of stay in the hospital, carry out unnecessary diagnostic
and laboratory tests and thus inflate the cost of treatment beyond the
necessary amount. Another major impact on insurer‟s costs is the constant rise
in medical costs, usually higher than the increase in premium rates.

The answer to this is the Fixed Benefit cover. While providing adequate
protection to the insured persons, the fixed benefits cover also help the insurer
to effectively price his policy for a reasonable duration. In this product,
commonly occurring treatments are listed under each system such as ENT,
Ophthalmology, Obstetrics and Gynaecology, etc. and the maximum pay out for
each of these is spelt out in the policy.

The insured also gets a fixed sum as claim amount irrespective of the amount
spent by him for the named treatment. The package charges payable for each
of these treatments is generally based on a study of the reasonable cost that
would be needed for treating the condition.

The package charges would include all components of the cost such as:

a) Room rent,
b) Professional fees,
c) Diagnostics,
d) Drugs,
e) Pre and post hospitalization expenses etc.

The package charges could even include diet, transport, ambulance charges etc.
depending on the product.

These policies are simple to administer as only proof of hospitalization and
coverage of ailment under the policy are sufficient to process the claim.

Some products package a daily cash benefit along with the fixed benefit cover.
The list of treatments covered could vary from around 75 to about 200
depending on the definitions of the treatments in the product.

A provision is made to pay a fixed sum for surgeries / treatment which do not
find a place in the list named in the policy. Multiple claims for different
treatments are possible during the policy period. However the claims are finally
limited by the sum insured chosen under the policy.

Some of the fixed benefit insurance plans are:

 Hospital daily cash insurance plans
 Critical illness insurance plans

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