Friday, July 10, 2009

Health Protection Plus plan from LIC simplified with example

Lic has come out with another Health cover with Unit linked plan called with Health Protection Plus Plan. The earlier one is called Health Plus plan. (Whenever any policy of LIC uses the word 'Plus' at the end it means its an ULIP product and its NAV based)

When you first take a look at the policy its a huge document seemingly very complicated with so many new terminology. Lets us simplify it one part at a time with example.
1) Hospital Cash Benefit (HCB). A daily benefit is payable in case the insured is hospitalized due to either accidental body injury or sickness. (It can be from min of Rs 250 per day to max of Rs 2500)
To understand this with an example lets take an HCB as follows for family of four
Person Insured : Rs 2000 (called PI )
spouse : Rs 1500
1st Child : Rs 1000
2nd Child : Rs 1000
you can also select varying HCB; for spouse and children maximum allowed is Rs 1500.

2) Major Surgical Benefit (MSB): In the event of the insured undergoing one of the major surgeries defined in the Annexure I, a lump sum benefit (regardless of the actual costs incurred) equivalent to the percentage of the sum assured mentioned against that surgery will be payable on providing proper proof of surgery to the satisfaction of the corporation.
(MSB is 200 times of HCB meaning for our example it works out as follows
PI = 200 * 2000 = 4 lakh
Spouse = 200 * 1500 = 3 lakh
1st child = 200 * 1000 = 2 lakh
2nd child = 200*1000 = 2 lakh)

3) Domiciliary Treatment Benefit (DTB). The Principal Insured can claim an amount equivalent to the actual expense he or she has incurred in respect of any domiciliary treatment or to meet the medical expenses incurred over and above the hospital cash/major surgical benefits in respect of either oneself or the others insured under the policy.
DTB is available only after at least 3 years premiums are paid

4) Premium : Let us see how to calculate premium with example as follows
a) If one life is covered then it is : 6 Times of HCB (for single life)
= 6 * 2000 = Rs 12000 (If only single person is covered)

b)If four lives are covered then it is: 6 Times of HCB for PI + 3 times HCB for others
for our example it is as follows
Premium = 6 * 2000 (PI) + 3*1500(spouse) + 3*1000(1st child) + 3*1000(2nd child)
= 12000 + 4500 + 3000 + 3000
= Rs 22500( If four lives are covered)

NOTE: This means that ideally it is better to take policy for entire family as we get 50% discount on other members premium.
for other terms and conditions you can visit LIC website

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