LIC Health Plus: Unit-Linked (ULIP) Medical Insurance Policy

It’s time for LIC or Life Insurance Corporation to reap the benefits of ULIP and health insurance product segment. LIC, which is primarily the market leader but mainly concentrated in the Life Insurance segment, has now launched its first health insurance product, which is also the first unit-linked health policy to be introduced in the Indian markets.

The plan from LIC is a combination of both the health insurance for the entire family (spouse couple and their children). It also offers hospital cash benefit and major surgical benefit along with a Unit Linked Insurance Component that is targeted to cover the domiciliary treatment-related expenses for the insured members.

The hospital cash benefit per day ranges from Rs 250 to Rs 2,500 for the principal insured and up to Rs 1,500 in the case of a spouse or a child. This benefit is, however, payable only for the period of hospital stay in excess of the first 48 hours – so that means that if you are hospitalized only for 48 hours or less, then you are NOT eligible for making a claim. This is an important point to notice, because the other health coverage policies which offer hospital expenses require you to be hospitalized for 24 hrs.
The major surgical benefit is a lump sum (of up to Rs 5 lakh) which could be a specified percentage of the sum assured depending on the type of surgery. After the minimum three years of premium payment, the insured has the option to withdraw an amount to meet domiciliary treatment expenses or medical expenses – so 3 years is like a lock in period which rightly justifies the tax benefits this policy has to offer.

Health Plus Fund of LIC ULIP Plan

The premium allocated to purchase units will be invested in a “Health Plus Fund”. A minimum of 10 per cent and a maximum of 50 per cent will be invested in equity. This is nothing better than a simply managed Mutual fund, with all the so called claims about benefits and drawbacks of a mutual fund.

For example, if a customer pays Rs 15,000 in premium per annum, Rs 1,614 would go towards health insurance charges. After deducting an allocation charge, the balance would be invested in the “Health Plus Fund”. Allocation Charges are the one’s which eat up majority of your invested money.

The insurance cover can be renewed until the age of 65 and at the end of the policy term, the balance in the policy fund is payable. The benefits continue even in the event of the death of one of the members. However, the biggest problem is that after the age of 65, you are NOT covered

Tax benefit

Customers buying this policy are eligible for getting the tax benefit on the premium amount under Section 80D. The maximum qualifying amount under this section is Rs 15,000 and Rs 20,000 in the case of senior citizens. People willing to go for Tax benefit as well as health plans for covering hospital expenses can apply for this policy, but make sure you know the terms and conditions, the exception list of pre-existing diseases and the allocation charges.

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