4 reasons why you should avoid Health Insurance policies from Banks with cheap premiums !

Do you come across health insurance policies from Bank with surprisingly low premiums and with amazing features and benefits , which makes you feel you should not miss this offer ? Today I will give you good enough idea about those health insurance policies and will help you understand the limitations of those health insurance policies from bank and why you should avoid them in most of the cases. Lets start.

Health Insurance from Banks

Background about Health Insurance policies offered by Banks ?

All the health insurance policies offered by banks is mainly a group health insurance cover provided to all their banking customers in association with some external general insurance company. What happens in this case is that a health insurance company approaches a bank and tells them that they can offer a specialized health cover to all their bank customers with lots of benefits with a small premium. The best part of these policies are that there is no medicals involved , there is fixed premiums for all age group customers, very low premium etc etc . On first look, you will not even believe that some thing of that kind can exist.

But there is always another side of the situation and now these policies despite looking amazing have lots of problems and limitations which you should know and then take the decision. Lets check them one by one

1. Depends on negotiations every year

Health insurance policies provided by banks are actually an outsourced thing . So if you buy it from bank A , then actually its a policy from Insurance company B, bank is merely a intermediary. As this policy is a group cover, the policy premiums and all the featured are going to be negotiated on a regular interval like each year or twice a year. Now the problem is that if the health insurance company feels that the premiums should be revised (for whatever reason) , then banks cant do anything and only customer will suffer here because he did his long term health insurance planning with this policy.

The premiums of the policy can rise like anything in future, because the pricing of the product is very flawed in most of the cases because banks do not have much experience in health insurance domain.

In absence of the right expertize with most Banks, the pricing could be majorly flawed. Though there are no published figures available, our sources at some Insurance companies say that it is an incessantly “bleeding portfolio”. We believe, any contract, in any field, which is not win-win,does not work in the long term.

2. Chances of association breaking in future

What will a customer do if the association breaks between the bank and insurance company in future ? Health care costs are increasing and its always a good thing to get your self insurance as soon as possible, now if after 5 yrs of running a policy suppose the association breaks, a customer will be left into a situation where he has to again find a suitable policy and who knows if he has developed some illness in between these 4-5 yrs, who will cover that. Here is a real life experience from Ketan shah on forum, see how he suffered when something similar happened with him

Dena bank 5 Years back came out with Scheme in tie up with Oriental Insurance for providing mediclaim at highly attractive premium i.e. Rs. 7000 for 5 Lac cover.

We hold various accounts with dena bank and as per their tie up we got ourselves covered (5 Policies) after paying 2 years premium, when the 3 rd year renewal came we were informed that the tie up with Oriental is no more there and the same policy will be transferred to United India Insurance for same Premium..

Now we have paid 2 years premium with United India and the 3rd year Premium we are informed that Dena Bank has increased the Premium 2 -3 fold for policies…

Now trusting Dena bank and paying 5 years of Premium which comes to almost 2 Lacs we are stranded and forced to pay high Premium for my parents and now we are in a fix If we don’t pay and we cant even change the company since parents are 65 +

we were assured that the scheme shall continue since it is bank tie up and therefore we got our previous pvt policy cancelled which had a very High Premium for my Parents (20000 for 5 Lac)
Please advice if we can approach IRDA for the same…

3. Limits on renewable age

Health insurance is a long term financial product and should always be bought with very long term benefits in mind. Having a life time renewal option is not just a wish, but kind of must have feature in your health insurance policy and that’s where these policies from banks fail. They all have limitation on renewal age in most of the cases.

Even if the premiums are lower, what will you do sometime in future when you really need that policy and it shuts the door for you.

4. Pathetic “service” issues

The service provided at the time of claim settlement is really a big parameter. Now if you have bought it from bank (here bank is the agent) , there is no “person” or “company” to help or assist you at the time of claim settlement ? Whom do you mail ? Whom to you talk to ? Who will you catch ? Who will you blame ? The bank due to their size and nature will not entertain you in proper manner.

Also being a group policy, it some times gets very complex to understand their limitation and many things will be a complete nightmare for you as customer. So its really a big disadvantage here . I want you to go through the following conversation on service issues which was done by Mahavir Chopra of medimanage and Ritesh sometime back . It will give you some idea on this aspect.

Bad Service in health insurance by banks

Overall I would say any health insurance from banks which are pure group cover should be just an extra health cover in your life. It should NOT be the primary long term solution for your health insurance needs. Its very important to have a large health cover from a very strong company with great benefits and strong service levels.

What do you feel ?

85 CommentsAdd Comment

  1. Vikas

    Dear Manish,

    Need your expert advice on taking an Medical Insurance from Bank for My father as he will be now entering 70 years of age. I have gone across many PSU banks providing low premiums.
    Kindly suggest further.

  2. Amit

    Dear Manish,
    Pls advice on SBI group ins policy tie up of SBI general ins and SBI … I want for my mother she is 58 yrs old. They are offering it at Approx 10k for 4 lacs

    Although no medical req but I will declare her diabities and BP which she has.
    pls suggest what are the shortcomings for this policy.

  3. kumarnatarajan

    hello sir i want to health insurance policy”religare health insurance”please advice me which insurance company i will go for give me best one thanks.

  4. D Das

    hello Jagoinvestor

    I am 38 yrs and I wish to buy one for my wife and kid. Is there any insurance policy which gives payments even for outdoor check-ups?
    can you suggest which one will be best for my family?
    best regards!

  5. Subrata Kumar Biswas


    I am government salaried employee. My age is 59 and my wife is 41 and my son is 19 years. I want cashless policies for my family. Whose policies will be better as per your opinion? I can pay approx Rs. 5000 per year. Can I include in cashless policies for my widow step mother whose age is 64. Which bank give best service?

    Subrata Kumar Biswas

    • Raj

      Dear Mr Biswas
      you can buy Bank of India Swasthya Bima Policy for some reasons, as premium is one of the lowest, Fix premium up to 60yers of age, More coverage then provided the other bank & above all you can give standing instruction to the bank to deduct the premium from your account when ever due so you will not laps your policy .Please check link for the forms & detail

  6. Harish Sharma

    Very valid point raised by Vishal Goyal above.

    1) If it cannot be guaranteed that the alliance between Bank and Insurance company may stay for long term, then it cannot be guranteed that the Insurance company “will have to” Renew Policy next year.

    2) when you say // the problem is that if the health insurance company feels that the premiums should be revised (for whatever reason) , then banks cant do anything and only customer will suffer here because he did his long term health insurance planning with this policy.//
    do you mean that in Individual policies we have a say?

    • Hi Harish Sharma

      My only point was that the relationship should be direct with insurer and not on the mercy of a deal. When you take a plan from company directly, its a individual plan and works differently. Whereas banks policy come under “group policy” which has different rules and structure.


  7. Vishal Goyal

    Dear Manish,
    You pointed out that – we would be left uncovered IF alliance between Bank and Insurance company breaks!!
    But presently there is no mechanism [IRDA or govt. rules] which binds Insurance company to grant [renew] policy next year. Also not guaranteed that they keep the same policy features and/or premium!!
    Insurance is the subject matter of solicitation* Afterall.
    Your comments please.

    • Vishal

      Now as per new regulations, its binding on the health insurance company to renew your policy till lifetime, unless you want it . So its not correct, that there are not in binding for that.

      Premium part is never fixed in health insurance, like life insurance , and it can never be .

  8. Jaya Dhameja

    Canara Bank Apollo Munich health ins policy for 5lacs
    Person to be insured 63 years old
    Premium Rs. 4500/- app.
    Underwent heart bypass surgery in July 2008
    Declaration in appln. Form is for any surgery/major operation in last five years only
    No provision/column to declare this 7 years old treatment/surgery
    Can this be answered in Negative?
    Can any heart treatment/operation be covered by the policy hence?
    Or it will be precluded
    Can you guide?


      • Avinash

        I know your article covers all such policies in general, but do you have any specific feedback on the Canara Bank Apollo Munich health insurance policy in particular?

        Mt father, aged 62 has taken this policy. He has had no surgeries in the past and doesnt presently suffer from any ailments.

  9. raju

    Hi ,
    I am getting a call of many Insurance company regarding the special scheme.
    Its one time premium granted plan.
    I this plan i have to pay once 20000 and i will get insurance clam of 5 lack for 15 yrs
    and get cash back of 400000 after 5 year.

    I want to know is there any kind of plan like this in HDFC and Agone .

    please suggest me

  10. Dipesh Mehta

    Canara Bank has now tied up with Apollo Munich to offer insurance policies. Has anyone taken this policy. It looks good and I plan to take the same. Need some review comments on this to decide…

  11. Sachindra Pratap

    Hi ,
    Guys i want to avail the benefit of medical policy ,
    Please suggest the individual policy would be good or to
    go with some bank example canara bank where premium is quite low.
    but it is also saying there are no caps and no limits .should is rely on them
    As they are saying every thing would be in written also.


  12. Praveen

    Dear Manish

    I have taken a health policy (Jeevan Arogya) from LIC. My mother was also covered under this plan. After 12 months from the plan my mother has to go for Angioplasty in Fortis Escorts, Delhi. When I met HI Manager he told me that only 40 % of SI for angioplasty will be paid which was not cleared at the time of taking policy. Request you to show the path shall I go for grievance redressal to IRDA or any other option is feasible. Still the claim is not settled it may take 10 to 15 days extra. Please guide me

  13. punit

    dear sir
    i have to invest some amount for my child,s education who is 2 years old on monthly basis.(approx 1000 per month). kindly suggest..i am confused about child education plans.

  14. feroz

    one claim direct hospital and other claim cheque amt

    for example Royal sundarm hospital plan Day 1 = Rs 1,000 per day

    i have 10 days hospital 2 lakhs clam max bumpa
    royal sundarm 10 days = 1000*10=10,000+ICU 2000*5=10,000

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