Tuesday, February 10, 2009

FD for hospitalisation: An alternative to Health Insurance of Senior Citizens


The term nuclear families has undergone a sea change and acquired a new meaning for senior citizens. With children well settled either in various parts of India or abroad, the lonely couple are left to fend for themselves and hence have truly become like a Hydrogen atom, with one proton and an electron around it!

Self respect prevents them from living with their children. They are financially secure and are confident of leading their own lives tolerably. But their feeling of well being has many hurdles. One is threat to their physical security. Another is the bugbear of hospitalization.

The seniors do realize the importance of health and are probably now a days more conscious than ever. But it is not hospitalization per-se which they fear but the process associated with admission and long procedures for discharge. In spite of all the adverse comments we pass and opinions we hold, under the present circumstances Corporate hospitals are the most well equipped and well staffed to take care of emergencies. The senior wives of older generation, while competently and lovingly managed the households and brought up a new generation of highly educated children, neglected their own acquisition of financial knowledge. One may not have ready cash in case of an emergency. The delay in obtaining cash from a bank or an ATM it self might be a cause of mental torture for the near and dear.

Even if one has Mediclaim insurance, with the hospital contacting TPA , TPA checking admissibility etc the waiting time is an additional mental torture for the near and dear who are anxious for the treatment to start forthwith.

Following is suggested to the Banks as a remedy for the above problem. Banks are anyway issuing fixed deposits. A special deposit with the same interest rates with automatic annual renewal can be issued but in the form of a card, say like a debit card. Let us call it as Hospitalization Debit Card (HDC) Specialty of HDC is that it is just like cash but can only be used in Network hospitals specifically for hospitalization. Presentation of this HDC at the hospital assures the hospital that the Bank concerned will make good up to the amount mentioned on the card.

For example, let us say a Rs. 10,000-00 HDC is bought. The customer can take it to the bank for premature encashment whenever he wants. Or if the customer or his kin are admitted in the hospital, the hospital can accept HDC in lieu of cash, tend to the patient immediately and can present it to the bank later and realize the full Rs. 10,000/-. If the expenses are say Rs. 5,000/- the account is squared off by the hospital and on discharge patient get back Rs. 5,000/-. As long as HDC is not presented to the bank it continues to earn interest which is regularly deposited into the customer's account. The existing choices for the present FDs can be made applicable to this HDC also. There should be compulsory automatic renewal facility. This facility if extended can be useful for all customers of the bank irrespective of age. If one has Mediclaim, one can do the claim reimbursement later on at ease.

What about those seniors who neglected to take Mediclaim policy when younger and for those seniors who are refused insurance by insurance companies on one ground or other? The above concept if extended can be made useful in these cases also. And so called hassles of critical illness and excluded treatments like dental etc can be avoided.

The insurance companies have increased the premia steeply. For a sum insured of Rs. 2 lakhs each for husband and wife we pay more than Rs. 20,000/- as premium. This amount is non recoverable unless you are hit by an illness.

A senior who is financially tolerably comfortable has to put in his savings somewhere. What better venue than an FD ? And why not put Rs. 4,00,000/- in this new instrument namely HDC?. Instead of losing Rs. 20,000/- per annum towards unrecoverable premium, one will gain Rs. 40,000/- as interest for every claim free year. Say, if the bank has Rs. 1,00,000/- HD cards for sale and if one buys four of them, they can be used judiciously as per need. No hassles at the time of admission in hospital, you earn interest if you don't fall ill, the bank gains in the form of mopping up of savings and the best of all good for the corporate image of bank that implements this idea that it is considerate towards seniors.

As presently there is income tax exemption of Rs. 25,000/- on Mediclaim premia. GOI can extend the same facility on the interest earned on money invested in HDCs since they are for the specific purpose of hospitalization.

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B.Sc(Engg), F.I.E(Ind), F.I.V., F.I.I.S.A.,
Chartered Engineer, Technical Writer,
Valuer, Insurance surveyor, (fire, Marine, Engg)
"Karmanyevaadhikaaraste maa phaleshu kadaachana"
"your right is to action only, and not to the fruits thereof"

1 comment:

  1. Given the high premium rates and the stringent exclusion norms of Insurance companies this is a good alternative.