Have you ever wondered why people with diabetes are able to get term life insurance but not health Insurance?
I am 40 years old and diabetic but have no other health issues. I was recently able to get a 20 year term insurance policy for Rs 1 crore though at a higher-than-normal premium. But all my efforts at getting a health insurance policy have been unsuccessful. An anguished post on Apnapaisa website.
This post (and similar other posts are,unfortunately,becoming very common) is both heartening and depressing at the same time. It is heartening because it clearly demonstrates a high level of insurance consciousness which is what all personal finance professionals have been struggling to promote in the past few years. It is depressing because it lays bare a very serious problem to which no thought seems to have been given so far.
More than 5 per cent of the Indian population suffers from diabetes in some form or the other. In fact,India can definitely bag the dubious honour of being the Diabetes Capital of the world. Despite the problem being so widespread,there does not seem to be any systemic solution in sight as far as availability of health insurance for this vast number of Indian citizens are concerned.
That brings us to the point of this article. Why are diabetic people able to get term insurance (even if at a higher cost) but not health insurance? That is not too difficult to understand.
Term insurance covers the risk of dying and pays a lump sum to the family of the insured person if he dies during the policy tenure which typically will be till the age of 65 or maximum of 70 years. Now medical science has progressed sufficiently that patients suffering from diabetes and its many complications (such as heart disease,stroke,eye problems,etc) are not likely to die before the policy tenure though the risk is higher than people with normal health.
Hence,it is possible for the insurance company to cover the risk albeit at a higher premium to cover the additional risk as compared to a normal healthy person of the same age.
Ironically,it is the very same advancement in medical sciences that is responsible for the health insurance companys reluctance to provide health insurance policies to such persons. The data of people being hospitalised (called morbidity data) in the future is starkly different for people who are diabetic and people who are not. The chances that people who are diabetic will need to be hospitalised repeatedly in the future and therefore incur heavy hospitalisation expenses repeatedly are fairly high.
Though health insurance is only an annual policy,insurance companies are not allowed to refuse renewal of the policy except on grounds of fraud. Therefore,the health insurance company is in effect giving a long-term policy when it first agrees to provide a health insurance policy to you. This explains the reason why the insurance companies are reluctant to issue health insurance policies to diabetic people. While the insurance companies have a valid reason for refusing to issue the policy for the first time to diabetic people,given the number of people affected,it becomes extremely important that a systemic solution be found for this issue.
Meanwhile,here are a few practical solutions that you can use if you (or one of your dependents) are diabetic.
The four nationalised insurance companies have health insurance policies that cover diseases arising from diabetes after a waiting period. But you need to pay an additional premium.
In spite of such clearly available product,in actual practice,the local offices of these companies refuse to accept such proposals by the simple expedient of returning the proposal papers without encashing your premium cheque. This way that application does not show on their records as refused. You can use the online application process recently unveiled by one of the companies (http://www.orientalinsurance.org.in/BuyNewWeb/BuyNewRevampServlet?productID=buy) and make full and complete disclosure and also make the payment online. This will ensure that the company has to provide you an official reason if they wish to refuse your proposal which they find it difficult to do since they have a specific product variant that is supposed to cater to diabetic patients.
Hopefully,in times to come,the health insurance industry will be able to cater to the growing number of diabetes patients without them having to resort to such maneuvers.
The author is CEO,Apnapaisa.com.
Author can be reached at www.facebook.com/apnapaisa