Those who have health insurance plans with clearly defined benefits may have a choice in the near future to receive their claims either through a lump sum payout or installments or even a mixture of both. Those making claims will now get an option to get a regular income source for a particular duration. Those with personal accident insurance or any other insurance plan with benefits will be eligible for this feature as per the recent guidelines notified by the IRDAI (Insurance Regulatory and Development Authority of India).
Last October, IRDAI set up a special working group for considering proposals for claim settlement via installments. The group has advised that customers should get the scope to choose this option or get their benefits in a lump sum payout. The proposal will be applicable soon for health insurance plans with defined benefits including critical illness plans, surgical benefit plans and hospital cash which payout fixed sums for any particular event that is covered. Insurance companies will have to repackage products to include this option.
Premiums are expected to remain unchanged irrespective of which option one selects. Yet, total claim amounts payable via instalments will be higher as compared to the lump sum. The payout will be done through equal instalments as per reports and the key benefit here is that the customer will get to know about the total benefit in the terms and conditions section in advance. Payment of claims via instalments will not be included as the default payment option and will come in addition to lump-sum payouts. Instalment payouts can be chosen flexibly at any time of the tenor as per the proposed draft.
The instalments can be paid on a bi-monthly, monthly, annual or quarterly basis and the option can be taken for a maximum settlement duration of 5 years. Some customers may also choose a percentage of the payout amount to be garnered as a lump sum payout while the remainder can be paid via instalments within a pre-defined duration. One can easily shift to instalments from the lump sum or do the reverse anytime without hassles. Those requiring a regular income source can now choose this option with the freedom to receive the sum assured in the way that they deem fit.
In many cases, a family’s financial position is affected by critical illnesses or even major accidents. In such cases, the steady receipt of money in instalments may help cover necessary expenses over a sustained time period. In cases where there has been a major critical illness diagnosed and major surgery is required, the lump sum payment will be the most helpful.