He asks two questions:

i. Should he switch form a mediclaim policy to a unit linked health insurance plan?

ii. How will the premiums be treated, with respect to tax benefits?

Before we answer Manish's questions, a few details. Two companies offer this policy presently -- LIC Health Plus and Reliance Wealth + Health. Here's how they work:

1. The policy gives two main types of benefits -- the hospital cash benefit and major surgical benefit.

Hospital cash benefit

You can choose an amount between Rs 250 per day (in case of some companies, the minimum amount is set at 5 per cent of the annual premium) and Rs 2,500 per day for each day that you are hospitalised. When there is a medical condition, the insurance company will pay you this pre determined sum for each day that you are hospitalised. In case you are admitted to the intensive care unit, a slightly higher amount is paid as per the rules of the company.

Major surgical benefit

Each company has a list of predetermined surgeries. For each surgery, they have a fixed payout, as a percentage of the sum assured. For instance, in case of a bypass, 100 per cent of the sum assured would be paid out whereas in case of knee replacement 60 per cent would be paid out.

Either ways, this policy gives a lumpsum amount and does not pay on actuals like in the case of mediclaim.

Photograph for representational purposes only.

Photograph: StockXchnge