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Last Updated : Oct 08, 2020 11:09 AM IST | Source: Moneycontrol.com

Green, orange or red: These colours will reflect if a health insurance plan is simple or complex

Green will mean a simple product, orange a moderate product, while red will be a complex category health insurance product

To make health insurance more customer friendly, every such medical plan by a general insurer or standalone health insurer will soon carry a colour code.

The colour codes will indicate the level and extent of the complexity of the product.

Earlier, mutual funds had a colour-coding system to denote the riskiness of the product. However, that has now been replaced by labels showing high risk or low risk.

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The Insurance Regulatory and Development Authority of India (IRDAI) has said that to calculate whether a health plan is simple or complex, a set of scores will be given to the product based on its terms and conditions.

color coding

Here, factors like number of optional covers, percentage of co-pay, waiting period, permanent exclusions, number of treatment, and simplicity of terms will be considered for deciding on a score for the product.

Products with a score of 2 or less will be classified green, more than 2 and less than 4 will be orange, while those above 4 and up to 6 will be red.

More the number of optional covers and percentage of co-pay, higher will be the score.

For example, if a health insurance product has 5 optional covers, then the score of the product on this parameter will be 3 considering that each optional cover has 0.6 as score.

Similarly, a score of 0.3 is given for every 1 percent rise beyond 5 percent in co-pay, subject to a maximum score of 6.

In case of multiple options, the average of the options shall be considered. For example, if a health product has two options of 10 percent and 20 percent co-pay then the average co-pay shall be 15 percent.

IRDAI has asked stakeholders to present their views on this colour-coding scheme by October 15.
First Published on Oct 5, 2020 05:16 pm
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