Micro Health Insurance Plans - Definition, Features & Benefits

As of 2020, 65.07 % of the Indian population resides in rural areas. A large part of this rural Indian population is dependent on farming or small businesses and can be categorised as low-income households. This significantly large part of the population usually doesn’t have access to affordable healthcare and medical treatment.However, micro health insurance plans aim to reach out to such individuals and families by providing them health coverage that otherwise seems a costly affair for such people.

It is a type of health insurance policy specifically designed to cater to the economically vulnerable section of the Indian population. While people belonging to low-income households are usually unaware of health insurance benefits, they are often unable to purchase health plans even if they know the benefits. This is because of the high premium of regular health plans that are often unaffordable to poor people.However, micro insurance plans are designed to provide health coverage at an affordable cost so that individuals earning meagre income could also purchase them and secure the health of their families.Microinsurance health plans in India are governed by The Insurance Regulatory and Development Authority of India (IRDAI) as per the IRDAI (Micro insurance) Regulations 2015.

• The insured amount can begin from Rs 1 lac and go up to a maximum of Rs 5 lacs. The cap on the maximum amount is due to the micro nature of the health plan.
• The insurance premium is extremely low compared to regular plans.
• Since the insured sum is low, a pre-entrance health check-up is usually not required.
• Anyone between 18 years and 65 years of age can be covered under such plans.
• A limited number of companies have been licensed to run micro insurance plans to ensure the quality of the coverage.
• Such insurance plans provide coverage for 1 year with an annual renewal option
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• Policyholders can extend the insurance coverage to cover all the family members through a family floater plan.
• Lifelong renewal of the policy is possible under such health covers.

• Pre-hospitalisation expenses are covered for 30 days before the date of hospitalisation.
• Hospitalisation expenses can be covered if the insured person is admitted to the hospital for a minimum of 24 consecutive hours or more. However, the 24-hour time limit is not applicable for daycare treatments.
• Post-hospitalisation expenses are covered for 60 days from the date of discharge from the hospital.
• No waiting period for the person having continuous coverage for more than 12 months.
• The micro health insurance plans also cover daycare treatment.
• Expenses incurred for treatment under AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Sidha and Homoeopathy) systems of medicines are covered up to the insured amount.
• The policyholder can get a percentage increase in the sum insured as a cumulative bonus for every claim-free year subject to the relevant terms and conditions.
• The cashless treatment facility is provided to the insured individual on getting admitted to any of the network hospitals.

Despite being such a useful product, micro-insurance health plans face some serious issues such as

• Lack of Awareness The target group for such plans are the rural households with low income. However, such people are largely aware of the availability of such plans. Furthermore, there is a general apathy among such people regarding health insurance, which is a major hindrance.
• Financial Challenges and Illness Many low-income households find it hard to take the blow of a sudden onslaught of illness or job losses. Unfortunately, these are the people who bore the brunt of the Covid-19 pandemic with a double blow to health and jobs.
• Financial Illiteracy A significant section of the marginalised segments of the society happens to be unaware of the basics of savings and investments. As a result, they often tend to ignore health insurance, considering it a luxury instead of a necessity.

The Covid-19 pandemic has painfully highlighted the brittle nature of life. It is time for everyone to understand the importance of having a comprehensive health plan regardless of socio-economic status.

can prove to be a safety net in times of crisis, especially for those who regularly find themselves at the receiving end of a financial catastrophe. Remember, big changes often begin with little steps toward the right direction.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.