Fri. Jul 10th, 2020

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This indemnity-based coronavirus health insurance covers PPE cost. Should you buy?

The Insurance Regulatory and Development Authority of India (IRDAI) has directed all general and health insurance companies to mandatorily offer a Covid-19 standard health insurance policy by July 15, 2020. This will be a standard health insurance policy for individuals and families which will provide coverage of up to Rs 5 lakh for hospitalisation expenses related to Covid-19. The policy will cover consumables such as PPE Kit, gloves, mask and other similar expenses used for the treatment of the coronavirus.

The base cover of the Covid-19 Standard Health Policy will be offered on an ‘indemnity’ basis whereas the optional cover will be made available on a ‘benefit’ basis.

The policy will be named Covid-19 Standard Health policy, succeeded by the name of the insurance company. These are the five key features of the standard coronavirus policy:

  • The health insurance policy will take care of basic Covid-19 related health needs of the insuring public;
  • It will be a standard product with common policy wordings across the industry;
  • It will facilitate seamless portability among insurers;
  • Senior citizen up to the age of 65 years can avail this policy;
  • The policy can be issued for three months, six months, and one year and can be renewed as per the tenure opted.

So, should you buy a Covid-19 Standard Health Insurance policy? Read on to find out more about this health cover.

Here are 10 important things you should know about the indemnity-based Covid-19 Standard Health Policy, as per IRDAI:

1 Sum insured The minimum sum insured will be Rs 50,000 and the maximum limit will be Rs 5 lakh (in multiples of Rs 50,000)
2 Eligibility The policy can be availed by persons between the age of 18 years and 65 years, as proposer. Proposer with higher age can obtain a policy for family, without covering self. The policy can be availed for self and the following family members
3 Hospitalisation expenses Expenses of hospitalisation for a minimum period of 24 consecutive hours only shall be admissible.
4 Pre-Hospitalisation/ Post-Hospitalisation For 15 days before the date of hospitalisation /For 30 days from the date of discharge from the hospital.
5 Modes of premium payment All the modes (Yearly, Half-yearly, Quarterly, Monthly) will be allowed for the standard product. ECS (Auto-debit facility) is also allowed in all respect of the modes.
6 Grace period For yearly payment of mode, a fixed period of 30 days is to be allowed as grace period and for all other modes of payment, a fixed period of 15 days be allowed as a grace period.
7 Freelook period The insured will be allowed at least 15 days from the date of receipt of the policy to review the terms and conditions of the policy and to cancel the policy if not acceptable.
8 Home Care Expenses Insurer shall cover the costs of treatment of COVID-19 incurred by the Insured person on availing treatment at home
9 Waiting period/ Pre-existing disease The policy comes with a waiting period of 15 days. Only PEDs declared in the proposal form and accepted for coverage by the company shall be covered after a waiting period of 48 months.
10 Deductibles* No deductibles are allowed with this policy.

* If the policy has a deductible, the insurer is liable to pay the claim amount only when it exceeds the deductible limit. For instance, if the deductible of your policy is Rs 15,000 and the claim by the insured is Rs 25,000, then the insurer is liable to pay only Rs 10,000. However, no deductibles are allowed with Standard Individual Coronavirus Health Insurance policy.

The premium difference
Being a standard product, insurers will be allowed to price the product following their underwriting understanding. What this means is that the policy premium will vary across all insurers.

Naval Goel, CEO & Founder of PolicyX.com said that the premium will be decided by the insurer based on their expectations of claim ratios, etc. which are based on certain assumptions. “The actuarial team of each insurer may make different assumptions and therefore the premium rates of the different insurance company may be different. Also, the quality of services offered by all insurers is not the same. This is another reason for the difference in pricing,” Goel added.

One add-on is available with the policy
Hospital daily cash: The company will pay 0.5 per cent of the sum insured per day subject to maximum of 15 days in a policy period for every insured member for every completed 24 hours of hospitalisation for treatment of Covid-19 on a positive diagnosis of the disease, as per IRDAI. Insurers will have to separately specify the premium payable towards these two add-ons so that policyholders can pick, choose and pay based on their needs.

Should you buy this policy?
This Covid-19 cover can be useful for someone who does not have a health insurance policy and is looking for one to protect them amid the coronavirus pandemic.

Chandan D S Dang, Executive Director, Securenow.in, a Delhi-based insurance broker said, “A coronavirus insurance policy is useful as low-cost protection if you don’t have a regular health insurance policy, or your health insurance coverage is low – say its Rs 1 lakh or lower. However, even in such a situation, it may be better to buy a regular top-up health cover since that will cover treatment both for coronavirus and other illnesses.”

Therefore, if you already have a regular or comprehensive health insurance policy you can avoid it given that Covid-19 is covered under these policies.

Here is a look what other financial planning experts have to say about the standard coronavirus health insurance policy:

Prableen Bajpai, Founder & Managing Partner, Finfix Research & Analytics, a financial planning firm: “The Covid-19 standard coronavirus health insurance proposal doesn’t offer anything substantial which is beyond the regular health insurance plans or even the recently introduced Arogya Sanjeevani Policy. Further, some of the aspects, such as absence of zone-based pricing, sum insured capped at Rs 5 lakh, and cover limited to novel coronavirus, make it restrictive. A first-time buyer should buy health insurance with a broader perspective and not just focusing on COVID-19.”

Amit Chhabra, Head-Health Insurance, Policybazaar.com: “Terms and conditions, and structure of the product is very similar to Arogya Sanjeevani policy. However, the only difference is that Arogya Sanjeevani policy is applicable for all illnesses and this new health insurance product applies to Covid-19 only. Therefore, if you can afford it, you must go for a regular or comprehensive health insurance plan rather than buying a disease-specific plan as a comprehensive health cover will provide you adequate coverage against all possible illnesses including pandemics like COVID-19.”



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