Page 153 - Ebook health insurance IC27

Sashi Publications

International markets have products called Health Savings Account, which
accumulates an amount, to be utilized when the account holder needs to spend on
health care.

These products encourage savings for expected high costs of medical care. Since
individuals are personally conscious of costs, so these products help reduce moral
hazards and mobilize greater funds for health insurance.

However, savings alone are often not enough to cover a person from unexpected
high cost diseases or chronic conditions. To avoid this, often Medical Savings
Accounts are offered together with a catastrophic health insurance plan to cover
such events.

Q14. Why is group insurance policy issued ? What are the critical factors for
issuance of group insurance policy ?

Ans. Group Insurance is the most common form of health insurance globally. They
reduce adverse selection and offers the customers the collective bargaining
advantage in terms of product features and premium discounts. The critical factors
for issuance of Group policy is that
(a) the group should be already existing with some other objective other than
insurance cover
(b) there should be minimum number ofmembers ( as perinsurer's requirements)
(c) there should be some group organizer who can act as a coordinator with
the insurance company.

Group Insurance policies can be issued to various types of groups like Employer-
Employee groups and Affinity groups. Again, the premium contribution can be
either contributory or non-contributory.

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