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Published in Moneycontrol. Written by Abhishek Bondia
COVID-19 has been the cause of declaration of national emergency in several countries. Finances of several nations are likely to get shaken because of the direct and consequential losses linked to spread of the virus. Companies and individuals are similarly worried about their own finances. The Insurance Regulatory and Development Authority was quick to issue a notification stating that COVID-19 is covered under standard hospitalization insurance policies. Further, the regulator encouraged insurers to come up with specific products to mitigate these losses.
Several insurers have now launched special plans for this illness. These plans are available both for individuals as well as for groups. Some key highlights of such plans are covered below.
Group indemnity plans
Insurers such as Religare and GoDigit have launched group-based indemnity insurance plans. These plans can be bought by companies for their employees. In case of COVID related hospitalization, employees can use this policy instead of the base group plan. The GoDigit product costs about Rs 1074 plus taxes for Rs 3 lakh sum insured for an individual. The cover has a waiting period of 15 days. The plan further warrants that the insured should not be suffering from specific illnesses, including diabetes, heart and lung diseases, at the time of policy inception. The Religare plan costs about Rs 500 plus taxes for Rs 5 lakh individual sum insured. It does not have a waiting period for COVID.
Nor does it have exclusion of non-COVID linked pre-existing diseases. The plan can be offered only to people aged 65 or lower. The Religare plan works out better as it offers a higher coverage for a lower premium, with limited caveats. More insurers are expected to start offering such plans soon. However, as the COVID situation unfolds, insurers are also revisiting their claim expectations and adjusting their pricing. Some insurers may prefer to issue such policies only to their existing group customers. As an employer, you can use such plans to increase the sum insured for your employees, with limited incremental cost.
ICICI Lombard has launched a group-based fixed benefit plan for COVID. The insured will get a coverage of Rs 25,000 for a premium of around Rs 135 plus taxes. If diagnosed with the illness, the sum insured would be paid as a lump-sum. The cover has a waiting period of 14 days. Coverage is excluded for individuals with an overseas travel history after December 31, 2019. People, who were suspected of COVID or quarantined before the policy inception, cannot be covered. Those in the age group of 18 to 75 can buy this policy.
Star health has launched a similar plan with sum insured of Rs 21,000 and Rs 42,000 with premium of Rs 459 and Rs 918 plus taxes. This plan does not have any travel history exclusions. However, the plan has a waiting period of 16 days and payment will be made only in the case of hospitalization. People between 18 and 65 years of age can buy this plan. These are cost-effective plans. However, a sum insured under Rs 1 lakh is likely to prove insufficient for covering any hospitalization related expenses. Such plans would pay out-of-pocket OPD expenses.
Reliance too has launched a group-based fixed benefit plan with sum insured ranging from Rs 25,000 to Rs 2,00,000. Coverage of Rs 2 lakhs can be bought at Rs 2040 plus taxes. A lump-sum would be paid in case of diagnosis of COVID. The cover has a waiting period of 15 days. Policy can be issued to people in the age group of 3 months to 60 years. The policy excludes any travel to restricted countries, and co-habitation with an existing COVID-19 patient. It has several add-ons, including cover for quarantine, loss of pay due to quarantine and treatment, and loss of job. Since it is a fixed benefit product, it can be bought by people to supplement their existing health insurance policy. A coverage of 2 lakh will help cover OPD, as well as short-stay hospitalization expenses.
A few insurers are allowing mid-term enhancement of existing sum assured for group policies for a limited time. This sum assured can be used for COVID and other illnesses as well.
Review existing policies
Aside from COVID specific plans, this is a good time to evaluate your existing health insurance policy. It is generally advisable to maintain a sum assured that is at least equal to one’s annual income, with a minimum coverage of Rs 10 lakhs. In case your existing coverage meets this thumb rule, you can deprioritize buying a COVID plan. For those who do not have a health coverage, this is a good time to consider one. New plans generally have an initial 30-day waiting period. After this, COVID-19 would be covered even in a newly purchased plan. For a 35-year-old, a standard health insurance plan costs about Rs 7000 plus taxes for a Rs 10 lakh coverage. Most of these plans can be bought online based on your health declaration.
It is reported that Wimbledon paid premiums for over 20 years to include pandemics as well. This would now help it set-off losses of over $100 million caused due to the event’s cancellation this year. It is important that you insure yourself adequately, even when the loss does not seem imminent.