Being a ULIP, Because of benefits u/s 80D It looks attractive.
Here is the analysis of the same for your Benefit.
Earlier the combo of Health Plan & ULIP was available from LIC as well as Reliance but in both these policies, the 80D benefit was not available on investment part. So ICICI Prudential Life Ins. cos. has moved with this cleverly drafted policy. Here the investment part of ur prem. or in other words fund value can only be redeemed against medical treatment/expenses. This policy is a combo of usual mediclaim policy & ULIP. Just dig deep into the skin of this policy & you will come to know the real truth.
First understand what this policy offers?
Apart from a normal mediclaim benefit, due to investment component from 3rd policy years onwards u can claim more than ur standard Sum assured with a ceiling set by company. Say ur original SA is 3L Rs, after completing 3 policy years u can claim a normal claim of 3L rs. under mediclaim benefit & another 20% of ur accumulated fund value. In other words u can redeem ur fund upto 20% value of fund. This fund value ceiling `ll increase with the years pass & after 10 policy years u can claim 100% of fund value.
As per the product brochure of this plan, This policy can be taken as individual plan as well as family floater plan.
Here r the negative aspects of this plan.
1. High Prem. allocation charges - 20% for 1st year, 2 & 3 year 9%, 4-10 years 2% & Nil from 11 year onwards.
2. In case of family floater option, in case of death of primary insured (the eldest member of family), the policy `ll be terminated immediately.
3. Regular prem. pmt. is compulsory for first 5 years for cover continuance option i.e if u don`t want to pay prem. in future to keep policy in force u `ll have to pay prem. for first 5 years.
4. No surrender of policy is allowed except the first 15 day free look period window.
5. Ins. charges for general mediclaim policy as well as policy admin charges `ll be recovered by cancellation of UNITs which `ll impact u severely in prolong bearish phases like the current one.
6. For individual plan option the mly. policy admin charge is 60 Rs. where as for family floater option the same is 90 Rs.
7. A long list of exclusion, which i can`t post here in this limited space.
8. Actually the health saving option of this policy is similar to our general practice of dipping into our savings to set off the medical bills.
9. Plz. note the prem. for general mediclaim benefit (known as Hospital insurance benefit in this policy) `ll be charged on ur actual age every month by cancellation of ur UNITs. this is not the case in normal mediclaim policies of Gen. ins. cos. where u pay prem. as per age band of say 31-35, 36-40...... Again this monthly cancellation of UNITs `l impact more in case of bear phases as more UNITs `ll be cancelled to pay insurance prem. per month.
For individual Plan - Min. entry age is 25 years completed & max. age is 55 years.
For family floater Plan - Min. entry age is 90 days & max. age is 55 years.
In each of the above policy the maturity age is common i.e. 75 years.
Recommendation
The same effect of mediclaim & saving can be achieved by purchasing a cheaper mediclaim policy as well as investing the surplus amount as per our comfort level in Eq. or Debt funds or anywhere else. So this policy should be avoided.
If there is anything that is good about this product, then that is, salaried persons who can't afford to pay for Health Premium after retirement, can take this policy as the Fund Value will take care of your Premium allocation and you can still continue to enjoy the Health Policy benefits.
Thanks to Ashal for valuable inputs
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6 comments:
why didnt u say a word about FREE 1% OF CLAIM OF HEALTH CHECKUP OR 5000 PER 2 YRS, AGAIN WHY DIDNT U SAY ANYTHING THAT U DONT NEED TO PAY A SINGLE PAISE AFTER 5 YRS TILL 75 YRS ARENT THESE IMPORTANT THINGS TO MENTION
Dear Sandeep, Here is my take.
1. Free health check up every 2 year. - Just calculate the money deducted by Ins. co. for Prem. allocation charges in initial years, the same free health check up we can arrange from this money. Even now a days Some plain vanila mediclaim policies offers free health check ups. every 2 years.
2. My dear friend by not investing money after 5 years, u r again playing in the hands of Ins. co. being ULIP, u r already aware that it's advisable to pay prem. By stopping prem. pmt. u r inviting trouble. As every year the basic mediclaim prem. 'll be recovered by cancellation of units. & in between if there is claim above SA limit, ur fund value 'll be worst hit.
thanks
Astha Sharma asked
How would you then get a tax benefit on the surplus amount? Here you can claim upto 15k under section 80D. One can save upto 4.5k tax by investing 15 k.... Won't that take care of the extra cost assigned to it... taking that into consideration, how expensive is this?
SRIKANTH SHANKAR MATRUBAI replied :
I can understand what the main question & relative doubts there on in your mind.
Here is the answer - For normal mediclaim policy, to claim 80D benefit upto max. limit of 15K, for a normal family of 2Adult & 2 minor child, the prem. 'll be around 2K to 3K per lakh & higher there after as per the age band. So in case of normal mediclaim, to exhaust full 15K limit, the cover amount can be anywhere from 5L to 7L depending upon age again. In case of IPru health saver, Ur total prem money is eligible for 80D even for a lower cover of say 1.5L or 2L. Bcoz, in this policy the extra prem. apart from normal mediclaim cover is invested ion funds & later on it can be used only in case of claim more than policy cover amount. Effectively u can't withdraw money from this plan for ur general needs like any other ordinary ULIP. That's why the total prem. is eligible for 80D. Plz. note in case of LIC & Rel. similar health ULIPs, the investment part can be withdrew at ur will & for any reason, hence no 80D benefit for full prem. amount for these policies. i hope the matter is clear to u now.
If you compair this with some general insurance plan.
1) It guarantees coverage till age 75 irrespective of health status, where in its not with general insurance plan.
2)After 5 yr you need to only maintain 110% of your first yr premium. And if you actually see the charge of health its very low as compared to general insurance.
Hello Sir,
What is the best health insurance policy that covers OPD charges you would recommend for my parents?
Their details is given below:
Father : Age 54 - Healthy but recently admitted and treated for intestinal disease.
Mother : Age 49 - healthy - but lost one kidney in 12th std to jaundice.Other kidney functioning well.No problems so far.
Both are active and have no problems such as cholestrol or cardiac disorders.
A representative for ICICI Pru health saver had come to our home and marketed this product. I was checking for reviews when i found your blog.
We are looking for a cashless policy that would avoid all the hassels.
Thanks in advance.
Nitya
Dear BCCI, yes, you are right. But remember your fund value has to be always above 110%.
It is not that I am against this Fund and NO one should invest.
I do recommend this fund to Salaried people who do not have any dependents to look after them after their retirement. This fund's investment kitty will ensure that their medical bill is taken care of by the Fund.
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