LIC forays into cc LIC forays into health insurance

Mumbai, Feb. 4 Life Insurance Corporation has launched its first health insurance product, which is also the first unit-linked health policy to be introduced in the market.

The plan combines health insurance for the entire family (husband, wife and the children). It offers hospital cash benefit and major surgical benefit along with a Unit Linked Insurance Component that is specifically to meet 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.

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.
Health Plus Fund

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.

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”.

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.

Mr R.R. Rai, Zonal Manager-West, LIC, said the corporation planned to sell at least one policy per agent on the day of the launch. He said that LIC hoped to sell one crore policies by the end of the fiscal.
Tax benefit

Customers buying this policy can avail of the tax benefit under Section 80D. The maximum qualifying amount under this section is Rs 15,000 and Rs 20,000 in the case of senior citizens.

Mr C.S. Rao, Chairman, IRDA, had earlier indicated that customers may not be able to avail this benefit since it was a unit-linked product which provided returns to the customer.

The regulator has, however, given its approval and according to LIC officials, the premium (in full) will qualify for tax exemption.

In the first 10 months of the fiscal ending January 31, 2008, the corporation has registered 71 growth in income from single premium policies at Rs 16,000 crore and 47 per cent increase in regular premium policies at Rs 14,000 crore. Under group schemes, LIC raked in Rs 6,000 crore. It has shown a 62-per cent increase in policy sales at 2 .64 crore.