Month: December 2020

What, according to you, is the right age to buy a health insurance policy? 

Many of you believe that health insurance is needed when you are older because that is the age when you are most likely to suffer from illnesses or diseases. However, the fact is quite different from this belief. A health insurance policy is needed at all ages, even for a new born, because illnesses, injuries and diseases are not age specific. Even children can become a victim to diabetes or heart related ailments. So, you need to insure yourself and your family members under suitable health insurance plans at all ages. 

Health insurance plans are also designed in such a manner that they fulfil the specific needs of individuals at different ages. So, let’s have a look at the relevance of health insurance at different ages and which insurance policy would be right to provide the required coverage – 

• Health insurance for new-borns

  Why? – New-borns are prone to infections and illnesses since their immunity is very weak. That is why you take utmost care when raising a new born baby. If the baby suffers from any illness after delivery or if the delivery is complicated and baby needs additional medical attention, the medical costs can be considerable. Moreover, the cost of vaccinations in the first year is also quite high. That is why a health cover is needed for new-borns.

  How? – You can invest in a family floater health plan which has coverage for the new born baby as well. Usually, such plans cover the baby for up to 90 days post birth. After that, you need to pay an additional premium to get the baby covered. Look for plans that also cover first-year vaccinations so that the vaccination costs are also handled. 

  Pro tip: Check the limit of coverage on the new born baby. Opt for a plan which has a high coverage level for adequate cover.

• Health insurance for infants and dependent children

  Why? – Infants are also in their growing stages when they are prone to illnesses and diseases. In case of children aged 5 years and above, there are increased chances of accidental injuries. Moreover, children can also contract diseases and lifestyle illnesses given their changing lifestyle habits. That is why you should have a health insurance cover for your children so that when they get sick, the policy would cover your medical expenses.

  How? – Buy a family floater health plan and cover your dependent children under it. Ensure that the plan has an optimal sum insured to cover the expensive medical costs.

  Pro tip: Dependent children can be covered from 91 days to up to 23 or 25 years. After the maximum age, you need to insure your children under an individual health plan.

• Health insurance for young adults

  Why? – Young adults, i.e. those in the age group of 25 to 35 years, need health insurance plans to cover them against possible illnesses and injuries. Moreover, when you buy a health plan young, you can avail comprehensive coverage and even wait out the waiting period applicable for pre-existing illnesses. 

  How? – If you are married, invest in a family floater health plan for you and your spouse. Choose a plan with maternity coverage if you are planning a family soon so that the maternity costs would also be covered under the plan. If you are not married but would be married soon, you can buy an individual coverage and then convert it to a floater plan after marriage.

  Pro tip: For your dependent parents, opt for an independent senior citizen policy. This would help you avoid frequent claims and also give you an additional tax benefit.

• Health insurance for adults

  Why? – As you age, you become prone to illnesses. As such, a health insurance policy is a must for you and your family members.

  How? – Invest in a comprehensive family floater plan covering all your family members. Choose a senior citizen policy for your dependent parents and cover them separately. Opt for a high sum insured or buy super top-up plans to enhance the coverage at affordable premiums.

  Pro Tip: Try and supplement your health plan with a critical illness plan as well. This policy would give you an added financial assistance in case of critical illnesses.

• Health insurance for senior citizens?

  Why? – Once you cross 60, your health slowly starts deteriorating and different ailments set in. Your employer sponsored cover also expires once you retire leaving you without coverage. A health insurance plan is, therefore, essential in older ages.

  How? – Choose senior citizen health insurance plans if you don’t have an independent health insurance policy. If you already have an independent health plan, check the sufficiency of the coverage. While your existing plan allows lifelong renewals, you should enhance the sum insured for sufficient coverage. 

  Pro tip: Health plans that cover senior citizens have a co-payment ratio wherein you are responsible to pay a part of the claim yourself. Check the co-payment ratio of the policy when buying.

As you can see, health insurance is needed at all ages and there are policies designed to provide you coverage at whatever age you are in. So, assess your and your family’s health insurance needs and pick the right coverage for an all-round protection.

The Insurance Regulatory and Development Authority of India (IRDAI) keeps the interests of policyholders in mind when framing regulations. The apex body continuously tries to make positive changes in insurance policies so that you can benefit from better coverage. In 2020 also IRDAI made many changes, some specific to the COVID pandemic and others for making insurance policies more consumer-friendly. Let’s have a look at some of the main initiatives undertook by IRDAI in 2020 –

The ‘Sandbox’ initiative 

Innovation and invention are needed so that insurance policies meet the new-age demands of customers. However, launching innovative products can prove financially challenging for insurance companies, especially if their products do not become popular. So, to promote innovation while keeping the cost-factor in control, IRDAI has launched the ‘Sandbox’ initiative. This initiative is for innovations in insurance. Under this initiative, insurance companies can test-launch pilot products providing specific benefits. For example, the ‘Pay-As-You-Drive’ motor insurance policy was launched under the ‘Sandbox’ initiative. The plans launched under the ‘Sandbox’ initiative are offered for a limited period of time. If, within that time, they become popular, insurance companies can launch a full-fledged policy. The ‘Sandbox’ initiative, therefore, promotes insurance companies to experiment and offers you, the customer, new benefits.

Health insurance initiatives

The widespread pandemic increased the importance of a health insurance policy. Individuals having health insurance plans started depending on their policies more than before and those who were uninsured bought health insurance to cover the medical bills if COVID came knocking. Amidst the uncertainty in this crisis, IRDAI issued many directives to insurance companies to make their health insurance policies customer-centric. Some of these directives are as follows –

• Handling of health insurance claims

  To ensure that policyholders got their health insurance claims settled easily during the pandemic, IRDAI asked insurers to expedite their claim settlement process. Moreover, it urged insurance companies not to reject their claims unless under unavoidable circumstances. 

• Launch of COVID specific health plans

  COVID hospitalisation incurred a considerable consumables cost, cost which is excluded from normal health insurance policies. Due to this exclusion, policyholders were facing considerable out-of-pocket expenses if they were hospitalised due to COVID. To solve the financial dilemma of COVID infection, IRDAI introduced two new health insurance plans, especially for COVID. Corona Kavach was launched as an indemnity policy covering all hospitalisation costs without any deductibles. Corona Rakshak, on the other hand, was launched as a fixed benefit plan which paid a lump sum if you were hospitalised for 72 hours or more due to COVID. Both these policies have solved the health insurance needs of individuals at low premiums and comprehensive coverage. They have also become the most popular plans as the pandemic is still threatening a large number of people.

• Introduction of wellness benefits in health insurance plans

  IRDAI has also asked insurance companies to offer wellness related benefits to their policyholders as a part of their health insurance policies. With this initiative, you would be rewarded for maintaining a healthy lifestyle, exercising and also for staying fit. This would, therefore, promote healthy living. Moreover, it would also benefit insurance companies because when the policyholders become healthy, the claim experience would be favourable.

Life insurance initiatives

Even in the life insurance segment, IRDAI made two major changes which are as follows –

• Launch of Saral Jeevan Bima

  Term insurance is the most basic type of life insurance policy and yet modern day term plans have a comprehensive benefit structure with multiple layers. This confuses an average policyholder and makes it challenging to choose a suitable policy. To standardize the humble term plan, IRDAI has introduced the Saral Jeevan Bima policy. This would be a standard policy offering a standard coverage that would also be affordable. The policy would come into effect from 1st January 2021 and is expected to make buying term insurance easier.

• Introduction of online KYC

  Earlier, physical signatures were necessary on the proposal form so that its authenticity can be proved. However, with social distancing norms still in place, buying and selling of insurance plans was becoming difficult. The IRDAI, therefore, introduced the concept of online KYC wherein physical signatures have been replaced with online ones. Now, you don’t have to physically sign the proposal form to buy the policy. The KYC verification can now be done through OTPs, digital signature or through an authentication link sent to your email ID. This has made buying and selling life insurance easier.

Motor insurance initiatives

In the motor insurance segment there was only one change. IRDAI removed the concept of long term own damage coverage. With effect from 1st August 2020, only third party coverage is available for a long term period and that too only for new vehicles. Own damage cover can be taken on an annual basis only making it cheaper and more transparent with respect to the no claim bonus that you can get.

All these changes are positive changes which have made insurance more accessible, more relevant and also more useful. While you can find the solution for your insurance needs much more easily, insurance companies can also benefit from a rise in popularity of their insurance plans. Moreover, with these changes, insurance penetration is also expected to increase. A win-win for all, isn’t it?

Health insurance plans have become necessary in these uncertain times. As the pandemic is causing more and more hospitalisations, people are suffering financial losses. Moreover, with no end in sight for the pandemic, the demand for health insurance has increased in 2020. Despite the increased demand, health insurance premiums have seen a considerable spike in 2020 compared to 2019. Many policyholders have found their premiums increased by 30% to 40% upon renewals and, in some cases, the premium increase has also touched 100%. What are the possible reasons to blame for the surge in health insurance premiums? Let’s explore – 

1. Increased claims due to COVID

   Health insurance companies have been registering high claim volumes due to the pandemic. As of 30th October 2020, insurance companies recorded an aggregate claim bill of INR 7700 crores under their COVID health insurance policies as per data compiled by the General Insurance Council (GIC). The pandemic has also pushed the demand for health insurance policies by 15.8% by October 2020. 

   (Source: Indian Express) 

   Due to high claim volumes, health insurers are forced to increase their premium rates to ensure profitability and solvency.

2. High medical inflation

   Medical inflation keeps on increasing year after year as the cost of medicine and treatments rise. According to the Economic Survey 2019, in financial year 2017-18, healthcare inflation was 4.39% which increased to 7.14% in 2018-19. Comparing these two financial years, inflation in hospital and nursing charges jumped to 9.4% in 2018-19 compared to 6.5% in 2017-18. 



(Source: India Today)

This rising inflation has caused health insurance companies to witness larger quantum of claims which, in turn, has increased the premium rates.

3. Wider coverage 

   IRDAI (Insurance Regulatory and Development Authority of India) issued mandates for health insurance companies to widen their scope of coverage. Illnesses and treatments like mental disorders, modern treatments, COVID-related treatments, etc. are now a common coverage benefit in health insurance plans. As the scope of the policies has widened, insurers are exposed to the probability of higher claims. Thus, to compensate for the wider coverage offered, insurers have hiked their premiums.

4. Increased risk of COVID for people with co-morbidities

   Knowing that people having diabetes, hypertension or other co-morbidities are exposed to sever COVID-related complication, insurers face a higher risk. That is why premium hike has been focused more on policyholders with co-morbidities or for those who smoke as they face a higher health risk against COVID.

5. The concept of level premiums in age brackets

   Many insurance companies charge similar premiums from individuals within a particular age bracket. This age bracket is usually for a period of 5 years, i.e. 25 to 30 years, 31 to 35 years, etc. So, if you are in one age bracket, your premium might not change for as long as you remain the same bracket. However, insurers might have to adjust their premiums depending on their claim experience and his adjustment is usually done when the age bracket changes. So, when you move to the next age bracket, the change in premium might be higher to account for the insurer’s claim experience. 

While COVID has definitely impacted the premium rates of health insurance companies, the above-mentioned factors also have a bearing on the tremendous increase in the premium rates. So, the next time that you renew your health insurance plan and find an unusually high amount of premium being charged, know the reasons why the company is asking for a higher premium amount. 

When you are young you feel that you don’t need health insurance plans as you are free from health issues and are not even likely to contract any in the near future. But are you correct in your thinking?

Health insurance plans are important even in younger ages, not only when you are in your middle ages. In fact, if the COVID infection is any indicator, people in the young age groups are not immune from the threat. As per the data published by the Indian Council of Medical Research (ICMR), people in the age group of 21 and 30 years accounted for more than 22.33% of COVID cases in India. Have a look –

As you can see, the highest percentages of cases are in the age groups of 21-30 and 31-40 years. Do you still think that you don’t need health insurance when you are young?

Youngsters today are more health conscious. They opt for balanced diets, exercise, Yoga and healthy living to maintain their health. However, despite their attention to their health, illnesses and accidents don’t come announced. Increasing level of work-related stress, dependence on junk food and, of course, the COVID threat all point towards the necessity of a health insurance policy. 

Moreover, when you buy a health insurance policy at a younger age, you get the following benefits –

1. Comprehensive coverage

   When you are young and healthy you can buy a comprehensive health insurance policy since insurers do not impose coverage restrictions for young individuals.

2. Waiting out the pre-existing waiting period

   When you are young, chances are that you don’t have pre-existing illnesses. As such, when you buy a health insurance policy, you can easily wait out the applicable waiting period for pre-existing illnesses. Then, when you actually suffer from any illness in later years, you can avail instant coverage since the waiting period is already over.

3. Earning no claim bonus

   Under a health insurance plan, every year that you don’t make a claim, your sum insured increases by a specific percentage through no claim bonus. This helps you in increasing the sum insured by 50% or 100% of the original amount and gives higher coverage at the same premium with NCB. When you are young, you are less likely to make claims thereby accumulating the no claim bonus which would give you a wider coverage under the plan.

4. Tax benefits on the policy

   Let’s not forget the tax advantage which your health insurance policy would provide. The premium that you pay for the health insurance policy would allow you a deduction on your taxable income up to INR 25, 000 under Section 80D of the Income Tax Act, 1961. Thus, the policy would not only provide coverage against sudden illnesses or injuries, it would also help you save taxes.

5. Financial security

   The last reason why health insurance plans make sense is the financial security that they provide. With a health insurance policy you can be secured that any medical contingency, however unforeseen, would not impact your finances. Given that you are young and might have limited savings, a health plan gives you the necessary financial security against medical emergencies. You can, then, plan for other financial goals and ensure that planning for such goals does not get impacted in a medical emergency. 

Modern day millennials have become smart about their finances and investing in a health insurance plan is another smart decision which you should take. Emergencies might disrupt your well-laid plans but when you have a health insurance policy in your armour, you can face medical emergencies without any strain.