In a country where the share of the government in total expenditure on health is only 25 per cent and the share of health expenditure in total government expenditure is a mere 3.4 per cent, you have only two ways to save yourself from any health related expenditure that eat into your savings — ensure that you and your family always remain healthy and, second, get a health insurance.

Unlike in developed markets, health insurance plans in India are mostly oriented towards covering costs of hospitalisation for illness or accident, subject to a long list of terms and conditions.

Choosing a comprehensive health insurance plan among a whole host of indemnity and defined benefit products is not an easy task. It involves assessing the health risks of your own as well as other members in the family and hedging the same with an insurance plan against the spiralling cost of healthcare.

After the introduction of portability in health insurance from October, product innovations have become more meaningful and beneficial to policyholders.

Take for example the Optima Restore plan of Apollo Munich. It’s different from other health insurance products available in the market in two major aspects — the restoration of sum assured and multiplier benefits.

Restore benefit

Under the restore benefit, the company reinstates the basic sum assured in case it is exhausted in a policy year. If the Optima Restore policyholder had bought it for a sum assured of Rs 5 lakh and exhausted the entire amount because of some illness, the sum assured of Rs 5 lakh will automatically be restored, which the policyholder can claim for some other illness in a single policy year.

The option is beneficial for a family floater plan where the probability of exhausting the insurance coverage by one member in a single year leaving little for others to claim for runs high.

The restoration of the sum assured without any additional cost proves extremely beneficial if some other member falls ill in the same year. This restore benefit is, however, available only once in every policy year and claims can be made for illnesses other than the one for which the first claim was made or by other policy members.

However, the restore benefit cannot be carried forward to the next year on renewal of the policy.

Multiflier effect

The multiplier benefit is basically a no-claim bonus that many other insurers also provide in their policies. But the difference here is that the Optima Restore policyholder will get a no-claim bonus equivalent to 50 per cent of the basic sum assured for every claim-free policy year. In other words, if you do not claim anything for two successive years, your sum assured will just get doubled without any extra cost.

However, if you make a claim in a year, you won't get any no-claim bonus and the company will also take away the accrued bonus to the extent of 50 per cent of the basic sum assured.

For example, if you take a policy for Rs 5 lakh and make no claims for the first two years, your enhanced sum assured will be Rs 10 lakh in the third year.

In the third year, if you make a claim, your available sum assured in the fourth year will be Rs 7.5 lakh. But there will be no increase in renewal premium because of the claim made in the previous year.

L&T General Insurance also offers a similar restore benefit, but the replenished sum assured is available for a claim only if the policyholder is hospitalised after an accident and not because of any other illness.

Age no bar

Another positive aspect of Optima Restore plan is that while one can buy this policy at a maximum age of 65 years, there is no cover ceasing age. The policy can be renewed as long as the policyholder survives. Most other health insurance policies stop providing the cover beyond 75 to 80 years of age of the policyholder.

Another interesting innovation has been introduced by Max Bupa in its Family First plan. Under this plan, you can include as many as 13 relationships, including parents and parents-in-laws.

Discount on premium

Besides, this is probably the only policy that gives up to 10 per cent discount on premium for every renewal, irrespective of whether the policyholder has made a claim in the previous year or not.

Insurers generally give a no-claim bonus in the form of addition to sum assured instead of reducing the annual premium that keeps on increasing as the policyholder gets older.

A reduction in renewal premium is a very beneficial innovation for policyholders.

These policies, Optima Restore and Family First, also come with no sub-limits specific to hospital room rents and various surgical and diagnostic processes besides life time renewal facility.

Cost factor

However, these benefits come at a cost. The annual premia of both Optima Restore and Family First are 30 to 40 per cent higher than the basic Easyhealth and Heartbeat plans of the respective insurers.

The Family First plan in particular is quite costly if you closely look at how it works. The sum assured under this plan is divided into two layers — first at the individual members level and second at the floater level.

In other words, you shall have to buy a minimum sum assured for each individual and a floater sum assured common to all members. For example, if you have four members in the family and you buy Rs 1 lakh sum assured for each member with a floater sum assured of Rs 5 lakh, your annual premium will be calculated on the basis of Rs 9 lakh sum assured.

But in practice, each member is eligible for a maximum sum assured of Rs 6 lakh — Rs 1 lakh at the individual level and Rs 5 lakh at the floater level. So, you are paying a premium for Rs 9 lakh instead of Rs 6 lakh for a family floater plan.