Health insurance policies will soon have a colour coding system of green orange or red to show whether the product is simple, moderate or complex. Insurance Regulatory and Development Authority of India passed a guideline saying that a number will be assigned to each policy. It will depend on the features of the product and the type of cover. It will ease buying for customers and with colour codes, the customer will simply be able to understand whether the product is simple or complicated to understand.
Green will be the colour which all health insurance companies will try to achieve. The colour will mean the product is simple. However, simple insurance might not be the best one for you in all cases. Factors like optional covers, waiting period, percentage of co-pay, permanent exclusions, and several treatments included and simplicity of the terms and conditions put forward by the insurer will be the main factor in assigning a particular colour to the policy.
Scores and their relation to the colour coding
Product with a score of 2 or less will be qualified for green. More than 2 and less than 4 will mean orange, while anything above 4 and below 6 will directly go into the category of red.
For getting the scores, a policy will be judged on seven parameters. They include the number of optional covers included, waiting period, percentage of co-payment, and number of treatment where sub-limits are applicable, deductibles, number of permanent exclusions and simplicity of terms and conditions. All seven parameters will have an equal role and will be given a weightage of 14,28%.
Option covers and co-pay
For each optional cover being offered, a score of 0.6 would be given to the policy. Let's suppose if a policy offers 6 option covers. The score of the policy on this factor would be 3.6.
With co-pay, a score of 0.3 would be given for every 1% rise above the 5% limit of co-pay. If health insurance has two co-payment options which I 10 or 20% the average co-payment of 15 will be considered? Co-payment is health insurance means the percentage of the claim amount that has to be borne by the policyholder on filing a claim. If co-payment is 15% then the insurance company will pay 8% of the claim amount.
For a co-payment of 15%, the score would be 3.
Waiting period and sub-limit
A score of 0.15 will be given for every month of the waiting period. For example for a waiting period of 12 months, the score will be 1.8. A waiting period is a period associated with a policy during which no claims would be paid for pre-existing diseases. A score of 0.6 will be given for every disease under the sublimit.
A deductible is an amount which the company has to pay before the insurance company starts paying up the claim amount. A score of 0.3 will be set for every 1% of deductible in the policy.
A core of 0.1 will be given for every definition, general clause and exclusion. The weighted scores of all the seven parameters are added to get the final score. Buy health insurance online to enjoy these benefits.