InvestorQ : Why has the IRDAI introduced colour coding for health insurance and What do the 3 colour represent in terms of health insurance?
Aishwarya Nimbalkar made post

Why has the IRDAI introduced colour coding for health insurance and What do the 3 colour represent in terms of health insurance?

Answer
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varsha Motwani answered.
3 weeks ago


In a bid to make understanding health insurance products simple, the Insurance Regulatory Authority of India (IRDAI) has introduced 'colour coding' for individual health products. This move will enable policyholders to understand the level of complexity while buying health insurance products.

The colour code will be indicated in the health insurance products and disclosed on the websites of insurers so that the customers can make an informed choice while buying a health insurance product, the regulator said.

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

The insurance regulator has asked health insurance companies to indicate the complexity of the produces offered using the colour codes-green, orange, and red.

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. 'Green’ will signify that the product offered is a simple one, easy to understand, and comprehend. ‘Orange’ colour will signify that the product offered is moderately complex. While the colour code ‘red’ will signify that the product offered is complex and needs to be understood properly.

This will help create more transparency as far as the products are concerned thus avoiding any unnecessary hassles at the time of claim.