All you need to know about Unit-Linked Health Plans

If you want a health insurance cover with the option of generating market-linked investments, ULHPs are the answer.

All you need to know about Unit-Linked Health Plans

Health is wealth, but with the right insurance policy, you can also combine health AND wealth. Unit Linked Health Plans (ULHP) is a combo pack of health insurance benefits and savings. It is similar to Unit-Linked Insurance Plans which is a market-linked investment with a life cover. ULHP can be used to obtain life cover as well. Many ULHP products offer additional life insurance rider fulfilling your wish of covering health cover, life cover and wealth goals in a single plan. 

About the ULHP plan

Regular health insurance plans cover your medical expenses as and when you require any medical attention or hospitalisation. To avail of this cover, you pay a regular premium that may include you as well as your family. However, if you don’t get hospitalised or suffer from any major medical procedure, the premium paid may seem like a sunk cost. Unit Linked Health Plans were designed to ensure that you get something in return for the premium paid. Thus ULHPs are health insurance plans that also offer a return on the investment, unlike regular health insurance plans.

Premium for ULHP

In ULHPs a portion of the premium paid is earmarked to provide medical cover to the policyholder. The remaining portion of the premium is channelled out to a market-linked saving plan. The insurer uses the saving portion of the premium to invest in various avenues on your behalf. The premium amount would depend on the age, health condition and factors like smoking habits, and vary from insurer to insurer.

Eligibility criteria for ULHP

Any individual above the age of 18 can purchase a UHLP. The maximum entry age generally varies from 50 to 60 years, while the maximum permissible age at the time of the maturity of the plan is 70-75 years depending on the policy terms and conditions. 

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Why buy a ULHP?

  • Additional cover: In regular health insurance coverage, there may be various expenses that are not covered. Hospitalisation is a compulsory criterion in most standard health plans, although additional riders are available to cover OPD treatment. But with a ULHP cover, you have the investment portion to protect you from out-of-pocket expenses. If there are portions of the medical bill which are not covered in the health plan, the amount accumulated in the investment portion of the plan can take care of such an uncovered portion. It can also come in handy for covering expenses of preventive diagnostics, pre-existing diseases within the waiting period, dental care, and such other medical expenses that are unlikely to be covered by a health plan.
     
  • Maturity benefits: As you continue to contribute towards the ULHP, your savings are expertly invested. Unlike a regular health plan, you get a maturity amount at the end of the coverage tenure. Therefore, you effectively have a sum at your disposal to take care of medical needs even after your policy coverage period. In the event of the death of the policyholder, the nominee is eligible for the maturity amount.
     
  • Ease of maintenance: Separate health and investment plans would need twice the maintenance effort. However, in a ULHP, you get to maintain your health cover and your saving goals with the same premium. Many ULHPs also have the facility of automatic deduction of premium from your saving corpus, in case you forget to pay on time. But this may not be available in the first few years.
     
  • Multiple investment options: On the investment front, you get several options. Many insurers offer customised plans where you can decide your level of market risk exposure. Besides, you also get ready-made plans that can be equity-heavy, debt-oriented, or hybrid.
     
  • Tax benefits: ULHP qualifies for tax benefits under sections 80C and 80D. Hospitalisation is covered under section 80D while the balance of the premium is deductible under section 80C.  

Related: How to switch from group health to individual health insurance?

Last words

Before choosing a ULHP,  review the plan on both fronts. The health cover shouldn’t be restrictive; it should provide the coverage you desire. The saving component should be as good as a similar standalone investment plan. The fund should have a reliable track record of returns. If your shortlisted ULHP meets all your requirements, you can look forward to achieving your insurance and investment goals with it. How to deal with medical bills that exceed your insurance cover?

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