Insurers insist on three-month ‘waiting period’
Depending on the severity of infection and whether hospitalisation was required, companies are also demanding extra medical tests including chest X-rays to offer a term plan for people who have no existing policies.
Life insurance companies are insisting on a mandatory three month wait period for people infected with the Covid virus and wanting to buy a term plan.
The trend, which started after the devastation caused by the second wave of the Covid 19 pandemic last year, is now a full fledged policy for all insurance companies. People wanting to buy a term plan have to compulsorily fill a so-called Covid declaration form which, among other things, asks whether the insurance buyer was affected by the virus in the last 90 days. Further, test results are also called for depending on the severity of the infection.
“Not only is buying an insurance policy for a Covid affected person difficult, we are also seeing its impact on the amount of cover offered. Before Covid, 40-year-olds could easily get a Rs 25 crore cover but now a Rs 10 crore cover is the most available. For 50-year- olds, the cover would be even lower. The impact has also been seen in group medical insurance as companies are now avoiding mediclaim policies for senior citizens and parents of employees because of their high risk of co-morbidities,” said a senior insurance advisor. He refused to be quoted because he is in line for a regulatory role.
Different insurers have set different parameters to qualify Covid affected people for buying a term plan. IndiaFirst Life Insurance for example has a 30 day to upto a six month wait period for people affected by Covid.
“If a person is home quarantined, we have a 30-day period but if he or she is home quarantined and has comorbidities, the waiting period could be of 60 days. For more severely affected people needing hospitalisation, it could be upto a six month wait period,” said Rushabh Gandhi Deputy CEO at IndiaFirst Life.
Gandhi said the changes have been initiated by reinsurers who want to protect themselves from claims and insurance companies are passing on the new rules.
The increased scrutiny for buying a term plan comes even as insurance premiums have increased between 10% and 30% post Covid as reinsurers have jacked up their rates to make up for higher claims due to the pandemic.
The stricter rules for buying new term plans is also a condition that reinsurers have put to keep their losses in check.
“Reinsurers have made it mandatory for insurance companies to have a moratorium period for those infected because even though people may be cured, there could be side effects of the disease,” Chowdary said.
At a time when insurance premiums have gone up, the new rules could hit demand for insurance also as the Omnicron variant is spreading fast and impacting more people though at a lesser severity than the second wave.
“It is too early to gauge whether this would have an impact on demand, so we will have to wait and watch,” said Chowdary. With Covid infections rising due to the Omnicron variant, this could impact demand for term plans.
The restrictions and price hikes come at a time when there has been an increased awareness about insurance and need for mediclaim post Covid. Insurance companies are hoping it does not dent demand.
“Not all people have been impacted by Covid and even those that are can buy a term plan after a few days of wait. The market is big and opportunities are large, so demand will not be hit that much,” Gandhi said.