I
consider AIG, the worldwide leader in retailing benefit policies such as
personal accident, critical illness and hospital cash. Across countries and
decades, they have mixed, matched and marketed these simple products to create
easy-to-sell and easy-to-understand offerings for consumers.
TATA AIG’s Maharaksha is a personal injury policy that provides coverage
for accident injuries like fractures and burns that result due to an accident.
It also provides hospital cash benefit in case of accidents, in addition to
lumpsum payment to nominee in case of accidental death.
My
interest in reviewing this policy came today when I received an emailer that
explained how I can avail of benefits of 5.5 lacs for just Rs. 1,224. A more
closer look at their website revealed that the emailer was referring to a
“cumulative coverage” amount i.e. it adds up the coverage of all 5 benefits in
the policy to come up with the total.
1. Everyday injury – Rs. 50,000
2. Hospitalization – Rs. 500 * 365 days
3. Loss of daily lifestyle – Rs. 150,000
4. Accident Private transport – Rs. 75,000
5. Accident Public transport – Rs. 150,000
….
so the total coverage is Rs. 550,000
I
am not a fan of this cumulative benefit technique especially when such a policy
is retailed using insurance agents or telemarketers. The chances of explaining
the fine print is almost zero there.
The Fine Print
As
per the Product Features Document of TATA AIG’s Maharaksha plan, there are 5
key benefits of the policy –
1. Cash benefit for accidental
injuries – This benefit covers a
series of injuries (major and minor) for which the insurance company shall pay
a cash amount as per their schedule.
This
has been defined in the TATA AIG website as “everyday injuries”. A common
person would read this like injuries that happen everyday like while cooking,
or playing football or slipping off a motorcycle or injuring oneself in the
bathroom or falling off the steps etc. However when I read the policy wordings,
I get a completely different interpretation of the policy. (TATA AIG Maharaksha Policy Wordings)
There
are two areas that a potential prospect needs to understand and clarify.
Part
1 - What is an accident? The
policy wording clearly describes what constitutes an accident. Accident means a sudden, unforeseen,
uncontrollable and unexpected physical event to the Insured Person caused by
external, violent and visible means occurring under the circumstances described
in Hazards H-1 and H-2.
Hazard
H-1 refers to injuries sustained while the Insured Person is riding as a
passenger (but not as a pilot, operator or member of the crew) in or on,
boarding or alighting from any civilian aircraft. Hazard H-2 refers to injuries
sustained by the Insured while riding as a passenger (but not as a pilot,
operator or member of the crew) in or on, boarding or alighting from any Common
Carrier.
This
is important because my interpretation of the policy wording is that only the
events described in Hazard H-1 and Hazard H-2 constitute an accident. So if you
slip in your bathroom or you fall off a motorcycle or you fall off the steps
etc. seem to not constitute an accident, as per the policy wordings. I have put
in an email to TATA AIG asking for an explanation.
Part
2 – What does the schedule say?.
Page 11, 12 & 13 of the policy wordings gives the schedule. To illustrate –
if in an accident, you were fracture your arm due to a fall and there are
multiple fractures – then the policy schedule allows you a benefit of 50% if
there is one complete fracture. A
complete fracture means a fracture in which bone fragments separate completely
or the break involves the entire width of the bone. However, if its an
incomplete fracture or a hairline fracture, then policy schedule allows a
benefit of 25% of allotted sum insured.
2. Cash Benefit during
Hospitalization – As a result of
injury occurred under Hazard H-1, if
the Insured is an in-patient in a hospital then a daily benefit is payable. The
daily benefit depends on the insurance plan chosen by the Insured person.
Again,
the injury must pertain to Hazard H-1 (civilian aircraft)
3. Cash Benefit for Loss of activity
of daily living – As a result of
injury occurred under Hazard H-1, if
the Insured suffers a permanent
inability to perform 3 or more Activities of Daily Living (mobility,
continence, dressing, toileting and eating) as defined in this Policy for a
continuous period of 180 Days, the policy shall compensate the insured for a period
of 6 consecutive months at the end of this period, as per the schedule.
Again,
two key points must be considered.
1.
The injury pertains to only Hazard H-1 (civilian aircraft)
2.
The injury has to be permanent i.e. it is beyond any hope of recovery with
current medical knowledge and technology. (a cracked bone is not permanent,
they can be healed)
4. Accidental Private Transport – This is covered under coverage C-1 of the policy
wordings that refers to Accidental Death. The wordings states that the
insurer will pay the sum insured given in the policy schedule if an injury
results in loss of life. Please note that the loss of life must occur during
the circumstances described in Hazard H-1 and within 365 days from the date of
the accident that caused the injury.
5. Accidental Public Transport – This is covered under coverage C-1 of the policy
wordings that refers to Accidental Death. The wordings states that the
insurer will pay double the sum insured given in the policy schedule if an
injury results in loss of life. Please note that the loss of life must occur
during the circumstances described in Hazard H-2 and within 365 days from the
date of the accident that caused the injury.
After
understanding the concept of Hazard H-1 and Hazard H-2, a clarification from TATA AIG is in order. I have marked an email to them and am expecting a phone
call from their expert soon.
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