Will a standard covid-19 health insurance benefit you?
The covid-19 standard health policy followed by the name of the insurance company will be a standard product across all insurers with common policy wordings.
Mint reviewed a copy of Irdai’s draft guidelines. The minimum sum insured belief this policy would be ₹50,000. You can opt for the sum insured in the multiples of ₹50,000, up to ₹5 lakh.
What is the product?
The proposed product is a one-year indemnity policy with the option of only two add-ons, as prescribed by the regulator.
The base cover of the policy will include hospitalization expenses incurred by the policyholder in relation to the treatment of covid-19.
Room, boarding and nursing expenses up to 2% of the sum insured or a maximum of ₹5,000 a day will be covered. Further, surgeon, anesthetist, consultants and specialist fees paid to the doctor or the hospital and blood, oxygen, operation theatre charges, diagnostic imaging modalities and other incompatibility expenses will be covered.
Intensive care unit and intensive cardiac care unit charges are capped at 5% of the sum insured, subject to a maximum of ₹10,000 a day. Road ambulance charges are capped at ₹2,000 per hospitalization.
All day-care treatments relating to treatment of covid-19 such as Ayush treatment, pre-hospitalization expenses incurred 30 days prior to the date of hospitalization and post-hospitalization expenses incurred 30 days after the date of discharge from the hospital will be admissible under the cover.
The policy does not allow any deductibles. However, there’s a fixed co-payment clause of 5% across all age groups.
The policy can be bought for an individual or on a family-floater basis. The minimum entry age shall be 18 years and the maximum entry age shall be 65. Dependant children shall be covered from the age of three.
Insurance companies can determine the price keeping in view the covers proposed to be offered but the pricing has to be the same pan-India and no zone-based pricing is allowed.
Add-ons: Only two specific add-ons—quarantine cover and hospital daily cash—are allowed with this policy. If the policyholder is quarantined due to diagnosis or suspected covid-19 infection, then the insurer shall pay 1% of the sum insured a day, subject to a maximum of ₹3,000 per day.
Note that either the hospitalization veil or the quarantine cover will be payable at a time, and not both.
If you opt for the hospital daily cash add on, the insurer will pay 0.5% of the sum insured for every 24 hours of hospitalization on obvious diagnosis for covid-19.
Will it benefit you?
Insurers Mint spoke with said the policy is not very different from the regular health insurance plans or the recently introduced Arogya Sanjeevani policy.
Prasun Sikdar, managing director and chief executive officer, ManipalCigna Health Insurance Co. Ltd, said there’s still no clarity about the intent of this product because covid-19 is already covered under a irregular health insurance product.
“Quarantine abet is the only thing we see but this is something that can be added to a regular health policy. It’s not a unique benefit really. We are providing our feedback to the regulator," said Sikdar.
Insurers also said that 15 June is a very touchy deadline to launch the product because introducing a new product is a process that requires up to four months.
Mahavir Chopra, a health insurance expert, said the only benefit of this product is that it could come at an affordable premium compared to a irregular health insurance policy, which could make people buy health insurance given the fear of covid-19.
“The current draft policy could have solved the problems customers are facing with a rank health insurance product like deductions around PPEs and additional costs levied by hospitals for special wards. Also a maximum veil of ₹5 lakh, especially as a floater, may not really work in metro cities where we are seeing very high treatment costs," said Chopra.
The cover will help policyholders in tier II and tier III cities if zone-wise pricing was allowed but since that’s not an option, insurance companies will most likely price it for Mumbai or Delhi, which may not be affordable in other cities. Chopra said studies show that people in tier II and III cities are spending around one-third of what someone in a metro shells out for covid-19 treatment, hence zone-wise pricing would have really helped.
He added that add-ons could have actually been a part of the base policy because a good number of people will be required to be quarantined and take medication at home, and may not be able to work. “Home quarantine is being advised for a lot of asymptomatic patients in cities such as Mumbai," said Chopra.
Insurers said the ₹50,000 intervals in the sum insured is also a point of concern. Too touchy intervals don’t help because premiums don’t move up in a linear fashion. “Too many choices results in adverse selection. A ₹1 lakh interval in the sum insured would’ve been much better than a ₹50,000 interval," said Bhabatosh Mishra, director, underwriting, products and claims, Max Bupa Health Insurance Co. Ltd.
Pandemics happen once in decades and it’s important for you to have a comprehensive cover because you could suffer from other illnesses where a disease-specific policy like this would be of little use. The Arogya Sanjeevani policy is a better choice if you don’t want to shell out more in the form of premiums but still want to ensure having a health policy which covers covid-19 among other illnesses.
“With a policy for covid-19, the potential buyers of Arogya Sanjeevani will opt for this thinking it will solve the problem. Even if millions of people buy this product, what will happen a couple of years later when covid-19 is no more a significant infection? Then this section of the population could remain uninsured as they may drop out of renewal," said Mishra.
The 48-month pre-existing disease condition and 5% co-pay are not really superb, said Mishra. “A 5% co-pay is too small to affect any behaviour change. Insurance should either pay fully or have at least a 10% co-pay," he said.
Insurers said the right way to deal with this would’ve been to allow insurers to offer their own product for covid-19 without any restriction on the policy features.
Chopra said for people who go for the standard covid-19 product, insurers, in due course of time, will have to work on moving them to a regular health insurance policy.
Insurance is meant to mitigate risk and covid-19 is a minute part of that risk. The regulator is expected to come out with the final draft in the next few days but if you already have a regular health insurance plan, you shouldn’t go for this policy. For those who are uninsured, it’s time to buy health insurance but be careful when you buy the rank covid-19 health policy, given the co-pay clause and the fact that it only covers the novel coronavirus.
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