Health Insurance by Banks – Should you buy?

Nowadays many Banks offer health insurance. The premium with some features looks beautiful. However, whether one should buy such Health Insurance by Banks or not? Let us diss the pros and cons of such products.

Health Insurance by Banks

Usually, banks offer such products or additional benefits to garner the customers or to retain them. I found few individuals who opened the account only because they need Health Insurance by Banks. But blind jumping just because of few eye-catching features may end up in trouble for you.

Advantages of Health Insurance by Banks

Let us first discuss some advantages of such products.

# Low Premium-

These are group health insurance products exactly like employer buy for their employees. Hence, the premium is lower compared to individual or family floater plans you buy separately.

This is why many buy such products. Especially if you compare the premium, the difference widens as you grow older.

# No medical Tests-

In case of individual or family floater plans, if you cross certain age limit, then insurance companies may ask for medical examination to enter. However, in case of such health insurance by banks, you can enter without any medical examination requirement. Because such products are group health insurance products.

# Life Time renewal

Earlier such plans used to restrict individuals to continue their health insurance after a certain age. However, with the advent of lifetime renewal option by individual and family floater plans, now these plans also offer you lifetime renewable option (For example Canara Bank’s Easy Health Insurance Plan).

# No Age-based premium

In case of individual and family floater health plans, your premium is fixed by your age (oldest family member’s age in case of family floater). However, in case of Health Insurance by Banks, many products offer single premium rate across age group. But few Health Insurance by banks loads the premium based on the age group. Hence, better to check the rates. For example, Canara Bank’s Easy Health Insurance Plan offers a single premium for all age groups. But the Union Bank’s Union Health Care loads the premium based on age group of the insured.

# Tax Benefits under Sec.80D

Many have some misconception that the premium paid towards such health insurance will not be eligible for deduction under Sec.80D. However, Health Insurance companies mentioned clearly in the prospectus of these products that the premium paid towards such health insurance products is also eligible for deduction under Sec.80D. Hence, you no need to worry about tax benefits.

# TPA or Cashless also available

One more myth spread by middlemen that claim may be a delay as banks may not give you service in a timely manner. However, if you go with the prospectus of such products, you noticed that they offering claim service exactly like individual or family floater schemes through their TPA service or in-house claim settlement team.

Hence, I don’t think service will be an issue. But open to listen from readers about some bad experiences.

# Boon for Senior Citizens or Unhealthy

This may be the biggest boon for senior citizens or unhealthy individuals who are desperately looking for health insurance. However, make sure to check the exclusions properly. If you get health insurance without any medical examination, then it does not mean that all illness is covered and your all claims are accepted.

This is one of the best plans if your all doors are closed to buy individual health insurance plans due to health issues or high premium.

# Offers additional features like Accidental and Critical Illness

Along with group health insurance, few of such plans offer you accidental and critical illness covers. Hence, all at once place (even though with some restrictions in features) may be good for an older generation.

Disadvantages of Health Insurance by Banks

Above we discussed advantages of health insurance by banks. Now let us explore the negative side of such products.

# You must be account holder of the bank

Such health insurance by banks is available only for bank customers who have savings account with the bank. You may all know that the current charges applicable to normal savings accounts. If the savings accounts is actually a NEED, then it is wise to tie up with such health insurance products.

However, if you are opening the account for the sake of buying this health insurance product, then keep in mind that you have to bear the cost of managing such savings accounts like MAB and other charges.

# Sum Insured Limit

Such Health Insurance products offer you limited sum insured amount. Especially few products restrict the sum insured after a certain age like after 65 years of age the sum insured will be Rs.5 lakh only. Hence, such restrictions may be the biggest hurdle considering the current cost of hospitalization.

# Premium Issue

This is the contract between the bank and insurance company. Hence, if the insurance company felt the claims raised drastically, then they increase the premium next year. Because it is just ONE YEAR CONTRACT.

In such situations, you may end up with either to cough more premium or stay away from the product.

# Features may change

Like premium, even the insurance company may alter the features while offering next year. Hence, looking at features while buying initially may not work out. Instead, you have to check whether there are any alterations or not. on yearly basis.

# Contract may end or bank may stop this facility

There is no promise from your bank that they provide you such insurance lifelong. Hence, if they feel the insurance company not suitable to them or such service costing them a bit, then they may end up this facility.

Such situation leads you to be away from the health insurance. If such situation arises, then the effect will be horrible for those who are older and unable to buy the individual health insurance separately. They have to end up with NO HEALTH INSURANCE during their age where the possibility of hospitalization is HIGH.

# Banks are not agents

You are buying the product from the bank. However, keep in mind that banks are not agents. Hence, when it comes to service, they may not help you. You have to directly interact with the insurance company.

Hence, never be in wrong belief that Bankers will help you in claim settlement.

# Restriction on entry age

There may be a restriction in entry age. Like in case of Canara Bank Apollo Munich health plan, the entry age is 5 years. However, for dependent children, it is 91 days to 25 years ONLY.

# Check exclusions, Co-Payment or Room Rent Sub Limits

Such plans have a long list of exclusions, co-payment clauses, and room rent sub-limits. Hence, the highest importance must be given to check these features. But Canara Bank’s Apollo Munich Health Insurance has no such limits and clearly explained as No pre-policy check-up, No Sub-limit on hospital room rent and No Co-payment.

# Banks may mislead you

Nowadays banks tied up with many insurance companies to sell their products. In such a situation, banks may mis-sell you the health insurance product rather than such group insurance.

Hence, you must know what bankers offering you. Cross check whether the health insurance they are offering you is group health insurance or individual health insurance (which include family floater). Then only go ahead and buy.

Now you have to decide whether you should go with Health Insurance by banks or go for individual plans separately. If someone has already purchased such plans, then please share your experience so that it may be learning for me and other readers also.

Conclusions-I always suggests having your own policy than relying on such uncertain group products. However, if you are looking health insurance for elders who have some health issues and due to which premium is not affordable or the insurance company denying your proposal, then you definitely opt for such plans.

Our old articles related to health insurance:-

73 Comments

  1. Sir, Which Bank health insurance is good to buy…having low premium and good benefits ??

    Reply
    • Dear Ketan,
      Hard to say as insurance companies usually customize it based on a customer basis. Hence, you have to approach the individual bank to understand the features.

      Reply
  2. Dear Mr. Basavaraj,

    Thank you for the wonderful article and website. You’re doing some great work, I must commend your efforts.

    I have a question regarding my case, which is a bit peculiar. Appreciate any advise that you can give.

    My wife was working in Bangalore in India and I am based abroad. We recently got married this year. However, 1 month after our marriage my wife was detected with Stage 2 cancer of gastrointestinal tract. Neither of us had a good understanding of health insurance and made the big mistake of not purchasing individual health policies.

    Her medical expenses for 2 surgeries were covered by her group health policy of National Insurance with sum insured of Rs. 3,00,000/- provided by her employer. However, her diagnosis was made after she had resigned from her job and was serving her 3 month notice period. She was planning to join me abroad. She is currently undergoing chemotherapy.

    Before her last working date, we got the group health policy ported to a family floater plan with the same sum insured with National Insurance.

    I wanted to buy additional insurance for her and realized that no insurance company was ready to entertain since she has already been diagnosed with Cancer. So I ended up purchasing additional health insurance from Star Insurance, the policy is called Star Cancer Care gold with sum insured of Rs. 5,00,000/- of which Rs. 2,50,000/- can be used for cancer related treatment after waiting period and the balance 2,50,000/- is for any other illness aside from cancer.

    I just want to take your opinion on whether we have any other options left to purchase additional insurance for her. Can we approach a bank with which she has an account and opt for health insurance plan provided by the bank for its customers?

    Many thanks in advance for your kind advise.

    Reply
    • Dear Bhat,
      It is heartening to hear your story. Whether you checked the employer-provided health insurance provider that after porting to an individual plan, her existing disease (cancer) treatment is covered or not? Also, whether you informed to Star health while buying that she was diagnosed with such illness? If so and Star health still issued the policy, then please cross check once again that is there any waiting period or exclusion in that star health policy.
      Regarding other options, sadly NO other options left for you.

      Reply
      • Dear Sir,

        Many thanks for your reply.

        1) Yes her individual plan covers cancer treatment also. But we will increase sum insured after 1 year. Currently we are covered upto Rs. 3 lakhs.
        2) Yes Star Health is aware of her condition as they have gone through her report. Star Health have a specialized plan for cancer patients called Cancer Care Gold which is what we have opted with Sum Insured Rs. 5 Lakhs. The policy is divided into 3 sections as follows:
        Section 1: Covers recurrence, metastasis, and/or second malignancy – (Sum Insured sub limit Rs. 2.5 lakhs, waiting period 30 months)
        Section 2: Covers Surgery and Interventional Therapy (Other than cancer and cancer related ailments) – (Sum Insured sub limit Rs. 1.5 lakhs, waiting period 30 days)
        Section 3: Covers Non-Surgery and Non-Interventional Therapy (Other than cancer and cancer related ailments) – (Sum Insured sub limit Rs. 1 lakhs, waiting period 30 days)

        Anyway many thanks for your time and valuable suggestion.

        Reply
        • From your suggestion I understand that I must build a separate corpus with short term view which should be liquid in case we require larger sum than sum insured.

          Reply
          • Dear Bhat,
            That will be sensible as you are knocking the health insurance company when you already have suffered.

            Reply
        • Dear Bhat,
          1) That is great but I think while enhancing they include the waiting period for this existing disease. Hence, be sure about exclusion.
          2) I suggest you to opt for super top up along with the existing this Star for at least Rs.25 lakh.

          Reply
          • Dear Mr. Basavaraj,

            Many thanks for the valuable advise, much appreciated. Sorry for the late reply.

            Reply
  3. Any idea, if any of such health insurance offered by bank considers proposer+ spouse + 3 dependents kids for family floater?? (Most of such plans consider max 2 kids)

    Reply
  4. how is SBI General Health Insurance.

    Reply
    • Dear Utpal,
      Do remember that SBI Bank is different and SBI General Insurance. Hence, don’t buy just because SBI name is associated.

      Reply
  5. Dear sir
    is the possible that one bank medical policy port into another bank medical policy…and another bank medical family floater policy port into single person medical policy…pls advice us..

    Reply
  6. Sir, Previously Iam having health Insurance plan in Oriental insurance now Iam planning to shift to Cigna ttk Health Insurance tie up with Andhra Bank this is a family floater can I go head with or can I drop this idea
    Please give me some information regarding Iam very Thank full to you

    Reply
  7. these bank claims that even their contracts with the exiting insurance company vanished ,they would shift you to new insurance and pre exiting clause will not matter then as if u have passed the 3/4 years in earlier insurance according to earlier health insurance provisions, but it could be disastrous if u come across cancer and with that insurance company and bank contracts voids unfortunately that year and new insurance with which bank have now have new contract would definitely decline your entrance to his insurance risk club.. am i right Basavaraj Tonagatti?

    Reply
  8. Bank of Baroda has discontinued their Baroda health policy given to its account holders. This is for e everyone’s information.

    Reply
    • Dear Sebastian,
      Thanks for your sharing. This is the biggest risk they pose to us.

      Reply
  9. Basuji, thanks for ur gr8 blog. I had family floater policy of 5 lakhs with BOIn NIA for last 11 years. Till last year premium was approx 7800/ n co has discontinued tie up with BOI n now asking to port it to their policy with pre of 27000/-. So what u suggest abt disadvantage with policy with bank tie up is very much true

    Reply
    • Dear Kulkarni,
      Check alternatives with other insurers for premium and features, then move on.

      Reply
      • I heard about this as a non-portable.

        Reply
        • Dear Ravi,
          Yes. But the same insurer may offer you the product individual product.

          Reply
      • Dear sir,
        My policy baroda health 5 lac floater is terminated on 15th Dec.
        If i go for 3 lac retail my premium starts from 22000 ro 26000 i.e cover is not sufficient at the age of 52 of mine and my wife and 17 yr old son
        If i go for pnb new india bank floater prem is 5 lac is 10213 and i go for canara bank appolo munich group ins.policy of 5 lac prem is 14517. This policy has 10 per no claim bonus upto s.i.,restoration upto s.i.,life long renewal
        Comparing both above which is better. At age 52 i go for retail or bank policy
        Pl reply. Awaiting for your reply.

        Reply
        • Dear Mukesh,
          If budget is your problem, then go with the bank provided health insurance where the guarantee of lifetime renewal.

          Reply
  10. Thank you for a good educative article. I am salary account holder with andhra bank. I took their floater policy(Arogyadhan) for my family. Can you tell me whether their policy is having the copay or room rent sublimits, if not where can I get the information.

    Reply
  11. PNB Oriental royal insurance has increased premium rate from March 2018. It seems thay are charging INR 10231 with GST for 5 lack SA (earlier it was around INR7104 with GST)

    Reply
  12. Hi Basu ji,

    I am very concerned about purchasing the health plan and its cover.

    Now if we go to online website for comparison they make all things very fancy with Super NCB, Recharge , hospital cash etc.

    I have insurance for my month @61 premium is 26000 for 5 lacs from religare health ( before 61 it was 17000/-)
    This sudden increase make me think that should i put some money in FD and keep it safe for medical emergency or
    continue on policy ?

    I we see exclusion list they are very long health insurance do not guarantee that it will help you 100% on emergency.

    We just cant relay on that.

    Now again here come other critical illness policy with survival period clause means insured purchase should be alive for 30 to 180 days depend upon diseases.

    The policy which i like again from religare “assure” with 0 zero survival period but having exclusion like heart attack (really this is the only one who dont cover most common critical illness !!!!) and only cover 20 illness + lifelong renewal

    But term plan from SBI cover 37 Illness having 14 days survival period but no lifelong renewal

    Then there are review where users are complaining for nearly all the providers which start user concern that should we trust them or not .

    Again health policy dont cover maternity and new born for any condition until certain period like 3 to 4 year (In india normally couple plan baby after 2-3 year)

    Now one more type of plan available as hospital cash

    So do we really need to spend that much of money in health insurance ?

    Can we balance the insurance using 3 separate plans instead of having 1 plan with 10 or 20 lac?

    1. Health insurance
    2. Critical illness
    3. Hospital Cash

    I hope i haven’t make it too long but i really need to understand my situation when i pay heavy premium and don’t get claim .

    Thanks

    Reply
    • Pankaj-You buy any type of insurance to transfer your risk. If you are capable of handling such risk and it not affect your finance, then you no need any types of insurance. Each product has it’s own features and exclusions. It is you who has to look and decide of what is required to you.

      Reply
  13. Hi,

    For all the Disadvantages you have mentioned here, Can I mitigate the risk for them by buying Group Health Insurance form 2 Banks?

    As per your recommendation of buying Own Insurance Policy will cost me (for Mother and Father both aged 54) between Rs 15K-20K (Sum Insured – 5 Lakhs) while I can get Sum Insured of 10 lakh in Group Insurance in the same premium

    I have PNB-ORIENTAL ROYAL MEDICLAIM INSURANCE POLICY for which I am paying premium of Rs 7174 for Sum Insured of 5 Lakh.

    Can you suggest me another Bank Group Insurance that I should Buy ?

    Reply
  14. Hi,

    As always, a nice article. However please correct me if I am wrong, but few “negatives”pointed out by you can be applied if I am buying the policy directly from the Health insurance company:

    # Premium Issue – The premium changes every year depending on claims and other factors even if buy the policy directly from the company.
    # Features may change – Same as above.
    # Check exclusions, Co-Payment or Room Rent Sub Limits – These need to be checked even if one buys from the insurance company directly.

    Regards,
    Samik

    Reply
    • Samik-1) It changes when your age slab changes but not every year.
      2) Many a times NO.
      3) Yes, who said these applies ONLY to group health?

      Reply
  15. Dear Basu,

    One of the disadvantages that you have mentioned is the non-availability of health insurance if the tie-up breaks. However, that is not true. Porting to company’s health insurance policy is provided.

    Reply
    • Saurabh-They may offer but you have to end up with the terms which are defined in the company’s health insurance which may some time entirely different than the product you have with bank.

      Reply
      • Hi Basu. Thanks for the quick response. I understand that the insurance company has to offer a policy (by regulation). I agree that the terms could be different. But the benefits of the existing policy will accrue in the new policy as well (e.g. waiting period, etc.) .

        Reply
        • Saurabh-Yes, I agree that NCB kind of features continues. But when it comes to group insurance, they feel more free than the individual plans.

          Reply
          • Agree Basu that the group plans. But in case of an unforseen circumstance like closure of the product, one can always continue with the individual plan of that company. The key here I think is to take the group insurance plan of a company that also has a good individual health insurance plan.

            Reply
            • Saurabh-Yes, in unforeseen closure and no option left with you then you can opt this.

              Reply
              • Hi Basu. You seem reluctant to recommend a group policy for health insurance. For someone who can manage the claims settlement process on his own, the money saved per year in premiums is a good reason to go for it. Don’t you think so?

                Reply
                • Saurabh-As long as there is no clarity of how long the bank provides us this insurance, it is hard for me to rely and buy it blindly. I suggest such products to those who can’t afford or who are unable to get the health insurance directly due to health issuers or so.

                  Reply
  16. While filling up propasal form for medical health insurance …there is a section which says TPA or non TPA…what option should I select.

    Reply
    • If you want cashless service then opt for TPA.

      Reply
      • Maulesh-Even non-TPA also provides cashless. TPA is just a third party which helps insurance company. Nowadays insurance companies have their own TPA within the company. Hence, TPA or non TPA not an issue.

        Reply
  17. Sir, I Just want to know that if EPF member completed 9 years & 8 months of services in an establishment and retired at the age of 58.
    Can the Nember claim retirement Pension benefits from the EPFO under EPS 1995?
    Thanks.

    Reply
  18. Hi Sir,
    I am planning to purchase health plan for my parents whose age is 49(mom) and 59(Dad).
    Pls suggest me whichpolicy is good for my parents(1. BOB(Baroda Health -National ), 2. BOI(National Swastya) 3.Canara (Apollo Munich Easy Health)).
    Pre existing diseases –
    Dad – BP and for Mom – Thyroid and Mental disorder(Not admitted in hospital only tablets and she is well and fit).
    Could you please suggest me which policy is good of you choice.
    And, I noticed the policy wordings in Apollo munich wordings were as below(http://www.canarabank.com/media/2553/brochure-10l-web-draft1.pdf)
    MAJOR EXCLUSIONS • Any treatment within first 30 days of cover except any accidental injury.
    • Any Pre-existing diseases/conditions will be covered after a waiting period of 3 years if the
    risk is accepted.
    • 1 year exclusion for specific diseases like cataract, hernia, hysterectomy, joint replacement etc.
    • Expenses arising from HIV or AIDS and related diseases.
    • Congenital diseases, MENTAL DISORDER, cosmetic surgery or weight control treatments.
    (For complete exclusions please refer to the policy document)

    Here, stating last point wether the insurance company will reject the claim that your mom has mental disorder. Please please clarify and sugget me.

    Thanks in advance.

    Reply
    • Naveen-It is hard to say about exclusions as it is purely a call of the respective insurance company. You better disclose all facts before proposing.

      Reply
  19. I think it is always wise to buy a product from a health insurance company. It is believed that maximum mis-selling happens when banks promote insurance to increase the fees based income. Ready made data of gullible account holders is also available to them.

    Sorry to say but banks now a days have lost focus on their core competency area i.e. disbursement of advances

    Reply
  20. Thank you so much for such a nice article.

    Reply
  21. Interesting facts brought forward to make the right decision. I guess most people don’t know that bank always have a tie up with insurance company to sell their products.

    Reply
  22. If you have a group mediclaim insurance policy through a bank, after 4 years can you port it to an individual policy of the same insurer?

    Reply
    • Kapil-Sir there is no clarity from these products brouche. But as per IRDA regulations, one can move from group insurance to individual plans within the same company.

      Reply
      • Group to individual they may allow as the premium will be high. But reverse they don’t allow as it has recently happened to me. Oriental insurance denied transfer oF family floater silver plan to mediclaim from Punjab national bank.

        Reply
        • Maulesh-Premium definitely will be higher but apart from that few features (especially the major one) may change.

          Reply
  23. Dear Sir,

    Thank You Very Much for Obliging my request and writing this fantastic article. All these days, I was very much confused about my Corporation Bank offering me Corp Mediclaim. All my doubts got cleared. Very well written.
    Thanks once again

    regards
    RAJESH PAI B

    Reply
  24. check out health insurance plan by Universal Sompo through iob and allahabad bank. Universal Sompo has very good record of fast settlement of claim.

    Reply
  25. The first main difference between heath insurance offered through banks and full health insurance by company is that in first case minimum 24 hour hospitalisation required for claim while full health insurance provide claim for day cares

    Reply
    • No. Domiciliary cases and day care cases are also approved

      Reply
      • Dr.Maulesh-He confused between what is daycare to hospitalization.

        Reply
    • Man-Please refer the product features. Minimum 24 hours hospitalization is also required in normal health insurance products also. Day care treatment meaning is different than what you are understanding.

      Reply
  26. Health insurance given by govt banks except SBI are very good and the insurance providers are also govt insurance companies. Few banks are PNB, BOI, Canara bank, OBC, etc. These policies are same like if you have purchased it personally. In fact from PNB you get better policy without co pay. I think that is better. But private bank’s policies are not good as per your article.

    Reply
    • Dr.Maulesh-Thanks for sharing your views. I think except few negatives, the positives are more. But the agents force giving more negative picture.

      Reply
      • Thank you basuji. Recently oriental insurance has increased premium of medivlaim policy through bank. It is now age slab based method but still cheaper than direct sell.

        Reply

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