A. HEALTH INSURANCE AND UNEMPLOYMENT INSURANCE

The earning power of the head of the family is constantly at the risk of being reduced or lost completely by reason of a disabling injury or sickness. Protection of personal earning power by Health Insurance is, therefore, basic to any plan of individual or family security.

All men seek good health and long life. Except for health itself, mankind probably fears nothing more than disability. Illness and injury are with us, always a hazard from which none is exempted. Voluntary health insurance has come to be the predominant method in developed countries for protecting people against the economic losses that disability entails.

Disability can never be a purely personal, individual thing. Modern man lives in an organised society. Its prosperity depends on the productiveness of its members. He who can work and earn, not only to supports himself and his family, but contributes to, the well- being and progress of his community. Ill health can change the individual from a producer to a large-scale consumer. In the absence of provision for meeting the financial consequences of disability, the disabled person , as a non producing large-scale consumer becomes a burden on the whole society.

Essentially, both life insurance and health insurance are income protection. The former extend the earning capacity of the insured person beyond the grave, the later provides a continuing income and paying medical expenses when the insured person is disabled.

Function of Health Insurance

1. Income replacementThe primary function of health insurance is income replacement. For most people, inability to work means cessation or drastic reduction of income. Health insurance indemnifies the insured against this loss. Personal and family expenses continue during disability, without which the individual and his family become a burden on society. Health insurance to replace income is regarded as primary because it keeps the family intact, puts bread on the table, and maintains a roof over the family’s head.

2. Reimbursement of Medical expensesThe rapid growth of health insurance to meet the costs of health care has tended to obscure the basic income replacement function of health insurance. The costs of care in a serious illness or injury are spectacular and for this reason, probably, many people are impelled to buy medical expenses coverage before insuring their income against cessation because of disability. The interest of doctors and hospitals in the spread of health insurance to defray the costs of their services is an obvious and motivating factor in the great expansion of this kind of coverage. Not only are the financial problems of the insured and his family diminished when health insurance provides the funds out of the which to pay the costs of health care, the financial problems of the doctor and hospital are also abated.

3. Stimulus Adequate Health Care While facilities are available to provide treatment for the sickness, lack of personal means causes many people to defer seeking needed health care. When such funds are available through insurance, the financial obstacle to early and adequate treatment is removed and the way opened to speedier recovery. No small factor in restoring the insured to good health is the relief from financial worry provided by adequate to insurance protection. Peace of mind imparted by the existence of a sound insurance program helps relieve the high tension of modern living and the fear or insecurity which themselves cause or intensify illness.

4. Maintenance of Credit Disability changes the income producer into a large-scale consumer. Without the income provided by health insurance, the disabled person’s credit crumbles. Recognition that disability a principal reason for default in the payment of obligations to creditors who look with great favour on adequate plans of health insurance. Purchase of expensive consumers goods items on the installment plan has become a feature of developed countries life. The installment loan a1most always has to be said of earned income. When disability strikes down

the breadwinner without insurance, the payments are not made. To prevent delinquencies of this kind, creditors offer plans of health insurance with benefits payable in the amount of the installment loan obligation when the insured is disabled.

5. Safeguard of the insurance Health insurance insures other insurances. In times emergency the benefits of health insurance contract provide the funds out of which life insurance and Property insurance may be maintained.

6. Business Insurance Health insurance has many important uses of financial value to business enterprises. Originally thought of as the principal support to the individual and family during the disability of the breadwinner, health insurance non-plays significant roles as business key man insurance and business and professional overhead expenses indemnity.

Health insurance also serves businesses as an important means of improving and solidifying good employer employee relations. Freed from worry over the costs of disability employees and to be more productive. An adequate health insurance program is an important inducement by which business attract and hold the services of skilled and talented people.

7. Health Conservation Many lines of insurance find their most important contribution in the prevention of the hazard undertaken. The inspection service of steam boiler and — machinery insurance is the most significant benefit they provide. Health insurances are conscious of the importance of doing all that can be done to abate disability.

UNEMPLOYMENT INSURANCE

Disability unemployment insurance or as it is sometimes called, loss-of- time insurance, fills the need of health insurance to a great extent.

Unemployment insurance is a measure of social security designed to protect the insured workers and their families against contingencies of life e.g. unemployment, old-age, dependency, industrial-accidents, Sickness etc.

It is financed by the workers, the employer and the state. A worker covered by any such scheme is assured that in the event of specified calamities and on fulfillment of certain conditions, he and his family would be entitled to on income at least sufficient to keep body and soul together. Such income is a supplementary to worker’s own resources if any.

Disability unemployment insurance in Bangladesh

Bangladesh does not have comprehensive social insurance programme. The following provisions in the “Bangladesh Labour Law 2006” however protect the workers and their families in case of contingencies.

1. Workman compensation2. Maternity Benefit3. Provident Fund, Gratuity, Pension, etc.

GROUP INSURANCE

While the Provident Fund and Pension Scheme makes provisions for the old age, Group Life Insurance provides protection to the employees during their working years and the childbearing period when their obligations are the highest and the ability to pay the premium is limited.

Group insurance goes a long way towards winning the loyalty of employees and keeping them satisfied and contented. It gives them a sense of pride to work for an employer who is alive to their needs. Group Insurance guarantees cordial relations between the employer and the employees and improve their efficiency and productive capacity.

The group insurance protection relieves the employees of the anxieties concerning the consequences of premature death with a result that they work with greater devotion and satisfaction.

By mass selling and saving in management expenses, Group Insurance provides insurance benefits at a specially reduced rate of premium.

Group insurance extends life insurance protection to a large number of persons who generally do not qualify for individual life insurance.

Group life insurance is the simplest form of insurance under which formalities and requirements have been reduced to the minimum.

Insurable Groups:

Group Life Insurance policies may be issued. to cover the employees of commercial, industrial, banking, and semi-Govt. Institution etc. It may also cover members of clubs, associations and beneficiaries of a Trust.

Considerations in selecting a group are: a) The group should have been formed and maintained for purposes other than obtained

insurance.b) There should be continuous flow of new entrants. c) There should be a single administrative organization above and willing to action

behalf of the insured group.

d) Safeguards should be established to produce a normal distribution of risks and to avoid the inclusion of an undue proportion of the total insurance in the group upon unhealthy lives, a few lives, or lives at advanced ages.

e) Employees of a group of industries or associated companies may also be covered under a single group insurance policy.

The minimum number of members at inception is, however, fixed at : i. 25 for group endowment assuranceii. 100 for group term assurance.

Eligibility of Employees

Normally only active, full time and permanent employees, aged between 18 and 50 years are eligible for group insurance. Employees in the service of the employer on the commencing date of the policy shall be eligible to join as from that date.

Employees entering the service of the employer after the effective date of policy shall be eligible for assurance after the completion of three months of continuous service.

Sum assured

The sum assured of an individual under Group Life Policy should be based a plan, which precludes individual selection like following :

It may be a flat amount for all employees It may be based on the employee's salary; It may be according to the employees position It may depend on the length of the employee’s service. It may be based on any two or more factors mentioned above.

No employee is allowed to choose his own sum assured, which is automatically determined by the category in which he is placed.

Payment of Premium

Premium for a group life insurance policy may be paid either by the employer only or by the employer and employees in an agreed proportion. When then the employer the scheme pays entire premium is called contributory. Premium is payable annually in advance, but the policyholder has the option of paying half yearly, quarterly or monthly with a normal grace period of 30 days is allowed for payment. No individual premium notice or receipt is issued to any employee insured under a group policy. A consolidated statement showing the premium in respect of each member and the total premium payable under the policy is sent to the employer.

Type of Group Insurances

Although there no various types of group insurance in practice. the company normally recommends the Group Term and the Group Endowment schemes. The company is however, prepared to quote for other schemes when requested.

a) Group Term Insurance Scheme: Under this plan, the sum assured become payable only at the death of the of the assured employee before retirement. Since only the death risk is covered, the rate of premium is very low. The premium may be paid on a level annual basis as under endowment insurance and the same amount of premium will be payable for an employee till to retires.

b) Group endowment insurance scheme: This form of group insurance provides for each insured employee benefits similar to those individual endowment insurance maturing at age 50, 55, or 60 years. The premium depends on the age at entry of the individual employee and will remain the same till the sum assured becomes payable upon attaining the retirement age or on death.

Conversion privilege:

If an employee’s service is terminated or otherwise to be eligible for group insurance, he may elect to convert with the full or part of his group insurance into an individual endowment policy maturing at age 60 years, provided he is not above 50. The premium for the individual endowment policy will be based on the rate of premium for usual endowment assurance of the company then in practice. But the sum assured of the endowment and the paid up policy will not exceed the amount for which he was insured under the Group Policy.

Settlement of Claims:

Claims are settle promptly by the company. In the case of group insurance the procedure for settlement of claims is extremely simple and the requirements are reduced to the minimum. In the event of death of any employee, the employer will send the claim form to the company duly completed. After the claim form reaches the company the cheque is usually issued within 2 hours. If accident benefits are involved, the company will require a satisfactory proof of disability or death by accident prior to the settlement of claim.