WhatTo Look For?
The Covid-19 pandemic has made everyone sit up and take notice of the importance of having a financial backup. An adequate health insurance comes to the rescue and protects you against medical emergencies. While there are a lot of private as well as government health insurers in the market offering comprehensive policies, banks are emerging as an alternative to the insurance companies and web aggregators. Moreover, the policies provided by banks are surprisingly cheaper as compared to the other plans available.
So how exactly are banks offering such cheap policies? Is there a catch?
Well, let’s find out!
How Do Banks SellHealth Insurance Policies?
Health insurance companies have tie-ups with one or more banks to promote their products and increase their market reach. On the other hand banks are looking at more products to generate revenue, and insurance with long term revenue potential clearly fits the bill. This tie-up between banks and insurance companies is known as bancassurance. In this partnership, bank staff, tellers and most importantly relationship managers become the point of sale and contact for the customer.
These policies are mainly group policies and are promoted with various enticing features, like-
- Lower premiums
- Lower waiting periods
- No medical check-ups involved
- Sometimes, fixed premiums for customers of all age groups
Now addressing the elephant in the room -
How Are The Premiums OfferedBy Bank Policies So Low?
Banks negotiate a wholesale or bulk rate for all its customers with the insurance company as a “group” of customers And here’s the catch -
Unlike personal policies sold outside the bank, the policies offered by insurers aregroup policies.
These are one year policieswhose terms and pricings may change every year - based on the claims made by the group of customers who bought the plan the previous year.
Of course, you haveno controlover the schemes and benefits of the plan in the current year, or the changes made to the T&Cs of the plan in the upcoming years.
ConditionsUnder Health Insurance Policies Offered By Banks -
Cover Restricted To Account-Holders
The policies are specifically designed for the customers of the bank, so you will have to be an account-holder first. And you will be covered under it only as long as you are associated with the bank.
Not A Permanent Cover
In case you close your account and move to a different bank, your health cover under the bank will cease to exist.
Hence, the plans offered by banks cannot be considered a permanent cover.
Changes And Terminations
The bank may change the insurer or because of losses the insurer may offer a new scheme during renewal, which may not be cheaper or have the same terms.
The bank as well as the insurance company associated with it can terminate its contract during the renewal of the policy - and you may end up losing your cover.
Lifetime Renewability Not Available
Health insurance is for a lifetime. And it’s generally purchased to cover future expenses, especially when you are old - in case you suffer from illnesses/diseases, resulting in hospitalisations.
However, the policies offered by banks have age restrictions and cannot be renewed once you cross that age limit. Insurers may offer portability, but this is subject to underwriting - and in case you have a claim or medical history the proposal for portability can be rejected.
Limited Features, Customizations Offered
Customising a health insurance plan is important because it lets you tailor the plan as per your and your family’s needs. Unlike personal health insurance policies, bank policies may not have add-ons, like No Claim Bonus or Restoration Benefit.
Bank Personnels May Not Have Proper Knowledge Of The Product
Bank agents who sell policies have heavy targets to be completed for various products including insurance. They may be more concerned with the quantity of the policies sold than the quality of the experience given.
Since they are not from the insurance space, they may not be well-versed with the intricacies of the plans they are selling to you.
Customer Service May Not Be Up To The Mark
Banks are almost like financial supermarkets - they sell multiple products from multiple parties. They aren’t usually responsible for service, claims or grievances. You will have to directly deal with the insurer for any problems you face.
Banks are mostly into selling insurance as a product, like they would sell say a mutual fund - so they usually don’t have dedicated teams to resolve your claims or other disputes. You may face hardships at the time of your claims process - as the bank will not be able to help you with it.
Now, the final verdict -
ShouldYou Buy Group Health Insurance Policies Offered By Banks?
You should, but only for the following two reasons -
If due to an illness, medical history, or the age-limitation of a family member you want to cover, personal comprehensive policies aren’t working for you. Then you should go for policies offered by banks, as they don’t generally have such restrictions.
For example, Meera wants to cover her 80-year-old grandfather, suffering from diabetes (a pre-existing condition). In this situation, private health insurance policies can be very expensive, and even unavailable. Hence, approaching a bank and buying a group policy makes sense here - because it will be less stringent in its approval process, and probably cheaper, too.
If you want to take advantage of a lower waiting period, and claim for a certain illness in the short term.
Taking the previous example again. If Meera goes for a private insurance policy which is available to cover for her grandfather, there will be a long waiting period. And they cannot make any claims for treatments or hospitalisations before serving it. Hence, going for a bank insurance policy is a good choice here.
All that glitters is not gold - Shakespeare was right indeed. With low premiums and low waiting periods, health insurance policies offered by banks look really attractive. But there are various downsides to them that are often not talked about. Group policies of banks can make sense if you are looking for health insurance for elders with health issues - due to which private/public insurers are denying your proposal. But as far as possible, invest in a good comprehensive personal health plan that really looks out for you, in the long run.
