The article discusses the potential entry of Life Insurance Corporation (LIC) into the health insurance market. If LIC enters the market, it’s assumed that it would do so by buying a significant stake in an existing health insurance company, such as ManipalCigna. The author explores the pros and cons of this move.
On the positive side, LIC’s massive distribution network, with 14 lakh individual agents, 85 banks, and thousands of common service centers, could be a powerful channel for selling health insurance policies. This could lead to better penetration and more people getting insured. Additionally, LIC could innovate by offering “Combi products” that combine life insurance and health insurance, making it convenient for customers to buy both at the same time.
However, there are concerns about cross-subsidization, where LIC, with its highly profitable life insurance business, could offer health insurance products at lower premiums, potentially triggering a price war and affecting the profitability of other health insurance companies. Some argue that this could be a negative for the industry.
The author also notes that the Indian government has restricted life insurers from selling indemnity-based health insurance policies, allowing only general and specialized health insurers to do so. Reversing this policy after just a few years could be seen as unfair to investors.
The article concludes that it’s unclear how LIC will enter the health insurance market, but if it does, it will likely face stiff competition and regulatory challenges. The author ends by emphasizing the importance of getting a term plan, including its benefits, such as protection, security for parents, and lower premiums for early buyers.