Published in Mint on 19th June, 2017. Written by Kapil Mehta
Her body lay unclaimed for 48 hours. The children had brought her, in failing health, to the hospital. After 5 days of intensive medical care, she died and her family could not afford the Rs50,000 hospital bill. Somebody did, finally, step in to pay and she was properly cremated.
This incident took place 3 years ago but came back vividly when I heard, last week, that a well-known academician had identified lack of personal dignity as one of India’s biggest issues.
Indignity is all around us. It’s there when your domestic staff goes broke because someone falls ill in their family; when someone yells at the waiter in the restaurant or when we must wait interminably for VIP chief guests to arrive. People with mental illnesses are looked down upon, executives out of a job face this, and the disabled suffer when they find themselves at the doorsteps of buildings they can’t climb.
Why do I bring up dignity in a column on insurance? Because the core issue here is financial dependence and insurance can address this. Take the disturbing example I started with. This is a common enough issue in South Africa where the quality of burial is an important measure of a life’s worth. Insurers address this by selling funeral plans. These are low-value term plans, issued without medical tests, that pay just enough to cover the last rites or any terminal medical expenses. The death benefit is paid within hours of the person dying. Several insurers will also take care of funeral arrangements. The poor in India have similar needs for terminal emergency care and last rites. That Rs50,000 could well have been paid by a term plan costing less than Rs200.
Many years ago, I would often visit my aunt in South Delhi. On the ground floor of her building, outside the house, there was always an old, infirm man on a charpoy (literally: a cot with four legs), cheerfully reading an Urdu newspaper. I learnt that his family had thrown the old man out to take care of himself. Look carefully, and such examples will jump out at you frequently.
In the US and Europe, long-term care and assisted living insurances are sold. These insurances step in if you are bedridden or need daily care. Here, most elderly have no option but to depend on their family for their daily care. That bedridden, newspaper-reading neighbour would have had a lot more dignity if he were not dependent on his family and could afford a caregiver.
The rich suffer indignity too. An increasingly common, though not fully appreciated, predicament is of senior executives losing their jobs. This shakes them up and turns their financial planning upside down because they thought they would retire at 65 not 45. This is effectively 20 years of a reduced income because most never get comparable high-paying jobs. To compound the social stigma, many executives have managed their finances and insurances poorly. Such executives want to port their company health and life insurances to themselves. Unfortunately, these options are limited.
The mentally ill face difficulties. Some estimates suggest that about 10% of the population suffers from some form of mental illness. There are just about 4,000 psychiatrists in the country, which makes counselling or psychiatric treatment expensive.
However, mental health cover is excluded in insurances. Also, most insurers will not issue you insurance even if you have mild mental ill health. The Mental Healthcare Bill 2017 requires insurers to treat mental illness at par with physical illness. Insurers should expand cover to pay for mental health. They should create a panel of psychiatrists that are acceptable, or define clear standards for mental illness the way they have for many critical illnesses. This will encourage people to visit credible doctors and not hide the issue.
Finally, life insurance should take on a more meaningful role in creating small savings. However, this will need a significant change in product structures. First, returns need to be far higher than the 2% to 4% offered today on traditional insurances. Second, cash withdrawals must be easier and less expensive.
Years ago, while in school, I learnt how small savings lead to dignity. When I needed money, I just had to show a report card to my grandmother. She couldn’t read very well but understood that a reward was called for. Carefully, with a toothy smile, she would unroll a wad of notes hidden deep in the layers of her rubia (a type of fabric) cotton suits and give me Rs50. She smiled because she could afford to give me money without asking anyone. I must confess that sometimes I may have shown her the same examination mark sheet twice to get more rewards. Had she known, she would have happily forgiven me. That’s what financial independence can do.