Get vaxxed: Life insurance policy proposal may not be rejected, but there are other benefits

Anand Pejawar, President-Ops, IT & International Business, SBI Life Insurance said that of now, there is no such ‘mandate’ of the proposer getting vaccinated before buying term policies.

“Nevertheless, vaccination certainly gives a sense of comfort to the insurer in the current pandemic situation.  The question of making it mandatory or not is only relevant in the short-run as we firmly believe that looking at the kind of initiatives taken by the government for getting people vaccinated, a substantial part of the insurable population will get vaccinated shortly,” he added.

Life insurers operate on the concept of mortality which means that the policy premiums are based on the risk of death in every age group. Higher the risk, higher the premiums, and tougher underwriting rules.

Is there a blanket rejection?

Moneycontrol had reported earlier that ever since the vaccination eligibility was extended to 45 years, there has been a move to ensure that policyholders get vaccinated on time.

This is essential for insurance companies to ensure that mortality risks do not rise. Death claims worth Rs 2,450 crore related to COVID-19 have been paid out by life insurance companies so far.

But, there is no blanket ban on the issuance of term policies to prospective customers who are not vaccinated.

A Tata AIA Life spokesperson said that the statement that the company requires vaccinations as a precondition for the issuance of any term policy is factually inaccurate.

"Further, at all times, we safeguard the interests of our policyholders to ensure they enjoy the highest degree of financial protection. Accordingly, our underwriting practices reflect the emerging realities and continue to remain prudent," the spokesperson added.

Similarly, the PNB MetLife spokesperson said that at the insurer, the submission of a COVID-19 vaccination certificate is not currently a prerequisite to apply for a life insurance plan.

Here, decisions taken by the reinsurers are crucial. Reinsurance is a risk cover taken by insurance companies against large claim losses. So, if there is a sudden spike in death claims due to COVID-19, reinsurers could ask life insurers to make tweaks in their policy issuance rules advising customers to take the shots.

"We continue to follow the underwriting guidelines as agreed with our reinsurers and in accordance with the regulations laid down by IRDAI," added the PNB MetLife spokesperson.

Health ministry data showed that as of 5.30 pm on June 9, more than 25 crore vaccine doses have been provided to states and union territories so far through the central government.

Of this, the total consumption, including wastages is 23,74,21,808 doses (as per data available at 8 am on June 9).

So, don't be surprised if you get a message from your insurer asking you to get vaccinated. It benefits you and also them.

Max Life Insurance spokesperson said that that the company continues to issue new term life policies to those who have not received the COVID-19 vaccine.

"We continue to be committed to the wellbeing of our consumers and stakeholders, and urge them to get vaccinated to ensure their safety and that of their families," the spokesperson added.

More than 1.33 crore (1,33,68,727) COVID-19 vaccine doses are still available with the states/UTs to be administered. Furthermore, 3,81,750 vaccine doses are in the pipeline and will be received by the states/UTs within the next three days.

What are life insurers doing?

SBI Life's Pejawar said that policyholders getting vaccinated are certainly a favoured option for the company.

“It will infuse a sense of stability in the portfolio in the short run. We do take cognizance of it, however, we wish to wait and do a proper assessment of our experience and pace of vaccination before coming to any long-term view on this issue,” he added.

Questions pertaining to COVID-19 included past infection history is now part of the proposal form which has to be filled for issuance of life insurance. The questions include COVID-19 positive date, duration, and nature of treatment (hospital/home quarantine).

Lalitha Bhatia, Chief Operating Officer, Ageas Federal Life Insurance said that while they have not mandated vaccination for term life, they get information related to the vaccination done by the customer as a part of the COVID-19 related questions to understand the medical history of the customer.

Getting these details helps insurance companies gauge the health condition of a prospective policyholder and also his/her mortality risks.

What could happen in the future?

Industry sources said that there would be changes in underwriting policies to allow quicker issuance of policies to those getting vaccinated. Further, after about four to five months, those not vaccinated could also be asked to cite reasons for their decision.

Atri Chakraborty, chief operating officer, IndiaFirst Life Insurance Company said that the company at this point is not mandating vaccination for term plans.

However, he added that while underwriting on a case-to-case basis, their decision may be positively inclined towards customers who get vaccinated.

Life and health insurers have already been exercising extreme caution while issuing policies to individuals who have recovered from COVID-19, the probable long-term effects of Covid-19 being the key reason. Soon, you will also have a lot of questions to answer on why you aren't vaccinated yet.