Drastic Premium increase – Oriental happy family floater

POSTED BY Newbee ON January 10, 2014 12:19 pm COMMENTS (26)

I have taken Oriental Happy family floater health insurance, with me as the proposer and my parents as dependents.

Policy is few years old. Suddenly now Oriental as changed the premium calculation method with a circular HO/Health/2013/CR-6837 dated 04-11-2013.   [View circular]

My premium has gone up from by 20000+ to 40000+, almost doubled !

So far they have been calculating premium considering me as primary member, but now they have changed it to person with highest age.
Explained in detail at:
http://healthinsuranceindia.blogspot.in/2013/12/the-changes-in-oriental-happy-family.html

As per the circular:
a) If one generation is covered the primary member would be the person of higher age
b) If two generations are covered i.e. husband, wife & children, primary member would be the person of highest age.
c) If three generations are covered by excluding the senior most generations, the highest age member will be the primary insured.

I fall in category (b)

1) Is anyone in the forum facing the same problem ?
2) Is it correct on Oriental to change the premium calculation method  for existing policy holders ?

What can I do about this ?

26 replies on this article “Drastic Premium increase – Oriental happy family floater”

  1. b n v subbarao says:

    hi manish ihave 3 gen policy.erlier premium 11500 now it is increased to 22236. acually in the policy my fater mother spouse and my 2 childlrens including me total 6 members.but now premium is calculating as per my fater and mother (1st gen).Is it correct sir

    1. Yes, its correct and finally they have removed the flaw .

      Go for it , there is nothing wrong . My in laws also have same policy and we went ahead with the policy !

  2. Ren says:

    Hi Manish,

    I have Oriental Family Floater for last 5 years of 6 lacs SA. With the rise in medical expenses, i would like to raise SA by 4 lakhs. i have been told by the broker
    1] I can raise 2 lakhs SA increment per yearly renewal. Is this true?
    2] My concern is – what happens to pre-existing illness waiting period of 48 months on 6 lakhs? does this get re-set?
    3] How does the calculation of No Claim discount work on premium – will it still apply on 6 lakhs SA ? & ofcourse the different in premium for 2 lakhs additional Sum Assured.

    1. I am not clear about the rules regarding this. You need to check about these with the company itself !

  3. Bheem says:

    I have Oriental Policy .Took via Medimanage for my in laws including me + child . Last year Premium was 12K now it is showing 25K+. Calculation has been changed to take highest age as the base to calculate Premium. There is no guarantee they will not make it 50K next year.I Don’t believe in this IRDA permission .Their interest doesn’t seems to be on consumer side. How can anyone allow to increase premium by 40% . My case more than 100% as calculation also changed.
    Now I’m really worried on are we making right investment for our future depending on Health insurance . As long as you are in 30’s and 40’s Premium looks less but once you get into age where you really need it is increasing in exponential way which might force you to opt out of policy. My advise keep enough money for your health care in future (even if you have policy). You never know when these companies will dump you. Looking at the progress I’m sure they will do it when we really need.I’m worried what will happen to all of us who are investing by trusting these companies in 20 years from now ..

    1. Pranav says:

      I too feel same as you….Today i also got news that my premium which used to be 14k to 16 k has now increased to 34 k, it more than 100%, i have sticked to policy only due to my parents considered in this policy , i dont feel that this company is caring or even have thought what pepole will face after increasing this premium more than 100 %, we need to go in depth…Anyone to guide us.???

    2. Even I suffered this personally, but looks like the premium is FAIR. Its that earliar they were charging in a wrong manner (flawed) .

  4. Ashutosh says:

    I was just thinking why not add a random child name instead of paying extra premium? Since you are anyways never going to claim any money for a non-existent child, it shouldn’t be a problem I believe.What say?

    1. Vinod says:

      U need to give birth proof? If you can manage one fabricated?

  5. rags says:

    Oh, are you sure about that? because that would be as good as buying a new policy. I’m using medimanage, I’ll ask them to clarify this point. Thanks.

  6. rags says:

    I’m hit by the same issue. What I did not know is that the policy allows you to increase the SA next time you go for a renewal.

    I had a SA of 6 lacs, and I fall in (b) category above. So, I decided to decrease the SA to 2 lacs, and increase it later when I have a child. I have group policy with my company which can additionally cover me and my parents. So, this is also another option for folks in a similar situation.

    1. Newbee says:

      Regarding increase in SA, as far as I know the waiting period will start afresh for the increased SA ( 2 Lacs in your case ) from the year you increase it. So, you might lose the waiting period that would have already run for the amount you decrease in the SA.

  7. ashalanshu says:

    Dear Newbee, please continue and face the new situation as it arrives.

    Thanks

    Ashal

  8. VinManHBK007 says:

    Mr. Newbee i was also in the same dilemna as yours this year.

    However thanks to my child being included (she is 1year 10months old) into the policy the premium was rationalised in the same ball park range as HIGHLIGHTED by Manish.

    My personal suggestion would be same to continue till the time you include the child. It is a good policy especially if you wanna have a supplement cover for your family as well dependent ageing parents.

    Cheers.

    1. Newbee says:

      Thanks, even I am considering to continue with it as you suggested

      I am also thinking what if they remove this THIRD generation benefit in future with yet another CIRCULAR ? As Manish pointed out this again is a FLAW in the policy.. might get fixed by them in the future or ?

      1. Truely speaking , in my opinion its again a flaw only. So for some years you can see it as a undeserving benefit and pay lower premium !

  9. Syamantak says:

    Sorry to pitch in between you and Manish, but I did not understand one part of your statement :

    “So, After 14 years I would have paid already more than 10+ Lakhs, but my sum assured would still be remain as 10Lakhs.”

    — Wouldn’t you have a No Claim Bonus added to your SA if you have claim free years? At present the NCB can accumulate upto 50% of SA. If we calculate the least NCB at 10% (which is a decent one to start the calculation with) after 5 years your SA goes upto 15Lac.

    Your option has one major drawback I felt. Oriental Insurance has a room rent cap, which is 1% of your SA. if you reduce the SA to 2L, you would have only 2000/- per day room rent. In that case you’d end up paying quite a handsome amount to cover actual room rent expense after some years (if not now itself. In Apollo Hospital a private room costs 3200/- per day).

    And the last point – Have you calculated the Tax Implications on the interest that you’d earn from FD (or the CG from the Debt Fund). Post tax return wont look very nice if you are on the highest tax

    In another forum, I was advised by one of the senior persons, who lost his wife last year, to have as much as possible coverage for medical expenses since we can not have a budget on an unfortunate hospitalization. 🙂

    1. Newbee says:

      Dear Syamantak,

      Oriental reduces premium by 5% for every claim free year which can go upto 20% reduction if you have 4 consecutive claim free years. But there is no change to SA.

      I have considered the room rent part, that’s why I have opted for the highest possible SA of 10 Lakhs. If I reduce SA by 2 Lakh, I can still afford a room of 8000 per day.

      I would gift this amount to my parent and invest in their name. They have no other source of income, hence tax outgo would be NIL

      1. Syamantak says:

        When I checked the room rent details of Orient Happy Family some days back, I could see they have a 1% cap. I’m not sure if you would get 8000/- per day out of a 2L Sum assured. Is that mentioned in your policy? You might get this because your policy is old – kinda loyalty bonus eh? 🙂

        1. Newbee says:

          If you read above, my SA is 10 Lakhs, 1% of which is Rs.10000
          If I, REDUCE BY two lakhs the new SA is 8 Lakhs, 1% of which is Rs.8000

          I said *reduce by* NOT *reduce to*
          May be my english is not understandable or you read it too fast 🙂

  10. Newbee says:

    Dear Manish sir,

    Thanks for the detailed reply. Even I am considering your suggestion to continue with this policy inspite of the huge increase.

    I was doing some calculation with the premium chart to project my future premiums.

    If I sum up the premium for future years (without including a CHILD), 14 years from now I would have paid more than my sum assured (let say 10 Lakhs). My father would be 70+ years old and my mom would be 60+ years old.

    So, After 14 years I would have paid already more than 10+ Lakhs, but my sum assured would still be remain as 10Lakhs.

    I am thinking, as an alternate I reduce the sum assured to bring down the premium to 20000+ , but create my own savings for the difference amount (20000) (invested in Debt MF/FD) just for medical purpose.

    If invest 20000 every year by end of 14 years, I would have 5+ Lakhs (assuming 8% return)

    Could you please comment on my idea.

  11. I know this thing

    Sadly, there is no way out . You should be actually thankful that you were paying “less” premium for all these years because of the FLAW in product design by Oriental . It was quite funny that for all these years they were charging premium considering PRIMARY proper age and not the highest person insured age, It was just against the common sense. The risk is same for the company , No matter who is primary and dependent . I mean if I insure myself and parents, how does it matter who is proposor . If its child, then also risk is same and if its parents, even then the risk is same.

    So for all these years actually it was a “Flaw” and “Mistake” to calculate premium on the basis of primary . Now they have just corrected it and the premium is FINE .

    I still see one flaw in their premium calculation when there are 3 generations , in that case they do not consider the highest generation (parents) and calculate the premium for the highest age out of the rest two lower generations . I mean earliar if you were insured as primary and your parents were also insured as “dependents” . There were 2 generations .

    Now if you have a CHILD , then you can also include him/her . and then there will be 3 generations . In that case , your parents age will not be considered and your age will be considered and then the premiums will come down again .

    Now either you need to have a child, or if you are planning to have on in future, just pay for next 1-2 yrs, and when you have a child , then include him/her in the plan .

    Right now , just pay and go ahead. I know it really hurts to see the premium double , but thats a fair premium . Right now if you try to shift to some other insurer, either you will not get it, or the premiums will anyways be similar to it !

    Manish

    1. Nil says:

      Hello Manish,

      I am quite confused with 3 generation scenario for premium calculator. I was taking same policy including mother, wife and one child since 3 years. Now, Calculation is as follows:

      Mother : full premium amounts mentioned in rate chart

      myself: full premium amount as mentioned in rate chart

      wife: 50% as mentioned in rate chart

      child: 60% as mentioned in rate chart

      Please let me know if the above calculation is ok and clarify the point u mentioned “they do not consider the highest generation (parents)”

      Anyone’s suggestion is welcome.

      Regards,
      Nil

      1. If there are 3 generation , then the premium is calculated as per the 2nd generation age

        1. manish says:

          Hi Manish

          Can we file a case against this, as my insurance increase in 3 years from 9000 to 26000 this year. which is not affordable. can you please guide.

          Regards
          Manish

          1. YOu cant do a case, you can only choose to not renew with them

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