Written by Amit Chhabra
With the number of people infected with COVID-19 mounting in the country each day, the Insurance Regulatory and Development Authority of India (IRDAI) has mandatorily asked all general and health insurers to come up with a standard individual COVID-19 health insurance plan for the benefit of the consumers. The health insurance product will be a COVID-19 specific plan addressing the basic health insurance needs of the public related to COVID-19 only and not any other ailment.
Know how the product will function
As per the guidelines issued by IRDAI, if the insured tests positive for COVID-19, the insurance company will be liable to pay the entire sum insured as a lump sum benefit to the insured. Say, for instance, you buy this standard health insurance product with Rs 3 Lakh sum insured and after a month test positive for the novel coronavirus. Under such circumstances, the insurer will be liable to pay you a lump sum amount of Rs 3 Lakh on hospitalisation. However, in case your hospital bill is less than Rs 3 Lakh, then the remaining amount can be used by you as per your convenience but if the hospital bill crosses the Rs 3 Lakh figure, the extra amount of the bill will be paid by you and not the insurer. Also, it is mandatory that the diagnosis must be confirmed by authorized centres as declared by the Ministry of Health and Family Welfare, Government of India and no other private diagnostic centres.
Along with the standard cover, customers will also be allowed to buy an add-on with the policy named as the Quarantine Cover. Under this cover, if the insured is quarantined due to suspected infection of the novel coronavirus, 50 per cent of the total sum insured shall be payable to the insured by the insurer. For instance, if you buy the standard COVID-19 plan with a sum insured of Rs 3 Lakh and after completion of the waiting period you are quarantined due to suspected infection, under such a scenario, the insurer will be liable to pay you Rs 1.5 Lakh as lump sum benefit. Further, if the policyholder is diagnosed positive for the coronavirus infection, the remaining 50 per cent will be paid to the insured as a lump sum benefit. However, one must note that the total amount payable in respect of the base cover and add-on cover, shall not exceed 100 per cent of the sum insured under any circumstances.
What the product will offer
The policy will be named as COVID-19 Standard Individual benefit-based Health Policy succeeded by the name of the insurance company. This will be a standard individual benefit-based insurance policy for individuals and families with the minimum sum insured Rs 50,000. You can opt for the sum insured in the multiples of Rs 50,000, up to a maximum of Rs 5 lakhs. The policy tenure of the standard COVID-19 product (benefit based) shall be for a period of one year and can be renewed every year. The plan will be available on a family floater basis for individuals with a minimum entry age of 18 years and a maximum of 65 years. The plan will facilitate seamless portability among different insurers. For the benefit of the customers, all the modes (Yearly, Half-yearly, Quarterly, Monthly) will be allowed for the standard COVID-19 product along with ECS facility in all respect of the modes.
Further, a fixed period of 30 days will be allowed as a grace period for all those choosing yearly mode for payment of premium while for all other modes of payment, a fixed period of 15 days be allowed as a grace period for the customers. The customers will also be allowed a 15 days’ free look period from the date of receipt of the policy to review the terms and conditions of the policy and to cancel the policy if the policy is not acceptable to them for any reason. Coming to the waiting period of the COVID-19 Standard Individual benefit-based Health Policy, the policy comes with a waiting period of 15 days.
Being a standard product across all insurer, each of the insurance companies will be allowed to price the product as per their individual underwriting terms and conditions meaning the price of the product will vary from one insurer to another. One of the major criteria for deciding the policy premium will be claims ratios as the actuarial team of each of the insurers will be making different assumptions and therefore the premium rates will vary across the insurers. As the premiums will vary, the quality of service being offered may also vary.
Need for standard COVID-19 health insurance cover
It has been observed that most private hospitals providing treatment for COVID-19 have been charging high rates with treatment costs ranging from Rs 3-5 lakh. While the government hospitals do not have adequate capacity and facilities to deal with the load of COVID-19 positive cases, it is very hard and difficult for the common man to bear the expenses of a private hospital and especially a super speciality hospital that provides adequate treatment for coronavirus infection. A super speciality hospital on an average charges Rs 10,000–Rs 20,000 a day for bed and the cost for bed along with PPE and medical staff comes around Rs 30,000 per day. As per these costs, the approximate cost for 15 days would be around Rs 3.5 lakhs – Rs 5 lakhs depending on the grade of the hospital and city.
Considering the prevailing conditions and in order to make quality healthcare within the reach of each and everyone, the IRDAI took an initiative by directing the insurers to come up with a standard health insurance product that provides adequate treatment for COVID-19. The product is designed keeping in mind people looking for an adequate solution for the treatment of COVID-19. With this product, people can be assured of getting quality treatment at a super speciality hospital through health insurance.
Who should opt for standard COVID-19 health insurance
If you have a comprehensive health insurance plan already, then don’t worry, your policy already covers for COVID and its complications. However, in case you don’t have a health insurance policy and all current options are not affordable for you, then you can look to buy the standard COVID-19 specific plan as it will give you comprehensive coverage for COVID. However, it is very important to remember that the plan will only cover you for COVID-19 and you will still be at risk, when it comes to any other critical illness, like Cancer, Diabetes, Heart-related ailments, etc.
Usually, pandemics occur once in several decades and it’s important to stay adequately protected not only against the pandemic but also against all other illnesses that may occur anytime. While a disease-specific health insurance policy will provide you adequate coverage against a specific ailment, a comprehensive health insurance policy will provide you coverage against all possible ailments. The COVID-19 pandemic will stay here for a limited time period and the standard health plan will be of no use later, however, if you invest in a comprehensive health insurance policy, the plan will stay with you for life long and apart from providing protection against COVID-19, the plan will cover all other ailments as well.
Insurance is meant to mitigate risk and COVID-19 is a very small part of that risk. For those who are uninsured, it’s the right time to buy health insurance but it’s important to be careful when you buy the standard COVID-19 health policy as the plan only covers the novel coronavirus and no other ailment. The Standard COVID-19 Health Insurance plan can complement a normal health insurance policy as it covers you for the loss of income. This plan can be bought as an add-on purchase along with a normal comprehensive health insurance plan.
The author is the Head- Health Insurance at Policybazaar.com. Views expressed are that of the author.
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