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Covid Health Insurance Cover: To buy or not to buy

By 20/01/2021March 12th, 2021No Comments

As India continues fairly in the race of increasing Covid-19 cases, globally, the IRDAI directive to mandatorily offer a standard health insurance policy for all policy holders, is much required. Provision for covering all hospitalisation expenses along with consumables like PPE, gloves, mask and other similar utilities, shall provide immense relief to consumers expending for treatment currently. The actual benefit of such covers can be eventually discovered as the situation subsides, cause as of now the world is still engrossed around the disease and the associated panic.

Inadvertently, extending the existing policy coverage to rope in such adverse situations was quintessential. Given that the disease specific coverage is limited to Covid-19, the price point shall be admittedly lower than any comprehensive health policy. As a note of caution, the specific cover in no way should be taken as a substitute for regular health covers.

Hereafter, consumers have an option to choose from the three primary available options. There have been previous announcements of extending coverage of ordinary policy to include Covid-19 expenses and that stands valid till date. So, the specific coverage announced could be an added supplement along with the normal policy or it could be purchased only for Covid-19 depending on affordability options, as the case maybe.

The driving idea recently has been to facilitate consumers in all possible means to battle against the stymie virus. As the country resumes in a staggered fashion, there has been increasing movement of people throughout. Considering the number of reported cases everyday, there is no hint of the curve flattening anytime soon. It appears that the virus is here to stay much beyond our anticipation. In the interest of the consumers, paying a single premium yielding fixed benefit is an extremely benefitting proposition.

On the contrary the challenge lies on for the insurers to devise profitable pricing for the product. The general trend is that premiums are computed base on age bands, however, for the current data set there is not established age-wise trend as of now. The entire phenomenon is absolutely dependent on the contraction of the infection or the recovery rates.

Notably, the base cover will be offered on an indemnity basis while the optional cover ought to be made available on benefit basis. Being a standard product, insurers are having the open option of fix the prices based on their underwriting understanding, consequently, there being varied premiums across insurers. The indemnity policy has definitely ticked the right box aiding towards providing a dedicated financial cover. The much needed measures include including the specific requirements put forth by Covid-19 which is a miss in normal policy covers. The gleaming part of the story is that pre-existing co-morbid conditions have been considered under the purview of the new product.

The consumers have to wait till a condensed policy is circulated with clear directions regarding the underwriting process, whether or not it shall cater to the vulnerable populace, and how soon will there be access to the product online. The relative prices of such products are further looked up to compared with the regular short term covers available.

In a nutshell, the policy is definitely a go-to choice for someone not having a health insurance cover and is desperately looking for one to acquire the necessary protection owing to the ongoing crisis. In the absence of a regular policy, the short-term product can yield much benefits. Nevertheless, the wise choice would be to go for a regular policy as it would cater to treatment for covid as well as other ailments.

There is not much of a significant addition to the existing framework. On closer scrutiny of the provisions, it can be well said to be restrictive with a cap on the policy coverage. For a first-time buyer, it is rather advisable to have a broad perspective while choosing the policy cover, not merely focussing on Covid-19. Apart from the affordability issue, the new plan might be avoided in all probabilities. A disease-specific health cover might not yield much in the long run. The intelligent option here would be to opt for a comprehensive policy to receive adequate coverage for all possible illnesses.

Sonam Chandwani

Sonam Chandwani

Sonam Chandwani is the Managing Partner at KS Legal & associates and heads the firm’s Corporate Litigation Practice.

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