Khota Paisa

Review : LIC Health Plus

Posted in Reviews by khotapaisa on July 5, 2009

Before I go into the money part of the policy, let us see the common sense part of it. Take this –
Q : Would you be able to finance hopitalizatoin if needed, say after 2 year?
A : Well it depends on how the market performs.
Sounds weird doesn’t it. But that’s what a person would reply if he/she has bought this policy. In simple words, it is a ULIP policy meant for medical emergencies. This very concept is full of contradictions, a sample of which you saw just now. Without going into details, let me put it this way. The world of insurance has two types of products, simple products & complex products. The simple ones are few and serve the consumer while the complex ones are many and serve the insurer. And this policy clearly falls in the second category.
Now coming to the mathematics, all that I want to state is that the effective rate of return (one that you get) for a 20 years policy turns out to be mere 6.15%. This makes it probably the costliest ULIP based policy in the market. I would say this kind of complex and convoluted (to the point that it misleads) policy should not be allowed by the regulator. So if you are planning to buy it, be sure that you know what you are buying.

In a simple world, a health insurance policy is for your medical expenses. You undergo treatment, you get paid/reimbursed. Now, why would the insurer try to change it into something so complex that it is not easy to understand by the layman? Because, by making it complex, the insurer can make money out of you without you knowing it. That’s why it is said that you should always buy simple (to the point) insurance products.


2 Responses

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  1. Shreeniwas said, on July 18, 2009 at 10:07 am

    This is a wrong analysis of Health Plus.

    The claim settlement is not dependent on fund value.

    Analyse properly before you air your wrong view on to others.

    • khotapaisa said, on July 18, 2009 at 10:53 am

      Mr Sreeniwas,
      Thanx for pointing it out. I have updated the post. Remember that the policy document states that only surgical benefits are fixed throughout the term. All medical expenses other than surgery depend on the fund value. And this is the risk I wanted to highlight.

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