Published in Mint on 19 May 2015, Written by Abhishek Bondia
Why does my insurance company ask for a health check-up before policy issuance? Recently, the insurance company declined the proposal to cover my mother. Is their stand valid?
—Ashwin Khattar
Insurance companies are entitled to conduct medical underwriting before policy issuance. This allows them to evaluate whether or not to insure an applicant. Every insurer has a customized set of medical tests that vary by age. For higher ages or high sum assured, advanced tests such as treadmill tests are done. The insurer then has the option of accepting the proposal at a standard premium, increasing the premium, accepting the proposal with exclusions, or rejecting the proposal. A pre-issuance medical check-up by the insurer is beneficial for the insured because it materially reduces the risk of claim rejection.
While the insurer is entitled to reject a proposal, you should enquire about the exact cause. At times, clarification about pre-existing conditions and prior treatment can convince the insurer to issue insurance.
We are a start-up with five employees. Can I buy insurance for them the way large companies do?
—Anirudh Deshmukh
A company can buy group medical insurance for its employees irrespective of the employee base. The important consideration, particularly for small groups, is that there should be no anti-selection. This means it should not be optional for employees to opt for insurance. A group cover offers advantages that just cannot be matched by an individual insurance policy. For example, pre-existing diseases can be covered immediately with no waiting periods, medical tests are not required, and so on. Other terms such as room rent limits and co-pay can be customized to fit the company’s budget. For a small group, Rs.2 lakh of the sum assured will cost about Rs.3,000 per person insured.
What risks are covered under home insurance?
—Gayathri
The coverage for home insurance varies by company. At a minimum, the standard fire and special perils insurance policy for home insurance cover 12 risks. The major ones are external fires including bush fire, storms and floods, riots, and malicious damage. Apart from these standard fire and special perils policy 12 risks, companies offer to cover earthquakes, terrorism, burglary, and theft. The earthquake cover, in particular, is important for cities in seismically active areas. Do make sure you ask for this extension when buying home insurance. There are certain policies that provide all-risk coverage subject to named exclusions.