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Why Covid survivors are struggling to get health and life insurance

Indians who have recovered from Covid are finding it tough to buy a life or health insurance policy amidst concerns about the re-occurrence of the virus in these persons and rising losses. One executive explained that insurers fear those who have recovered could develop lung-related complications, which has made them cautious about loss ratios

January 12, 2021 / 04:34 PM IST
Representative image

Representative image


Madurai resident Annapurni Thevar*, 42, who recovered from Covid-19 in August 2020, has been struggling to buy a health insurance policy ever since. Two insurers turned her away citing their companies’ “underwriting policy”, while two others quoted a premium that was 45-48 percent higher than the market rate.

“I disclosed that I had Covid-19 because it is not correct to lie. But insurers have been unwilling to offer a health policy. When doctors have given me a clean bill of health and I haven’t had any health complications, why deny a cover,” she wondered.

Typically, when customers are diagnosed with, say, a lifestyle disease such as diabetes or hypertension after buying an insurance policy, they are merely charged a higher premium at the time of renewal. This premium hike is also not automatic and is based on the past claims experience of the insurer.

India is second in the world as far as Covid-19 cases are concerned. Out of the 10.5 million positive cases in the country, 10 million have recovered, but getting an insurance policy has become a challenge for many.

Insurers have tightened their underwriting rules, which means that those who had contracted Covid-19 will either have higher exclusions or pay a hefty premium. Many recovered patients also alleged that they are being denied a policy and want IRDAI to direct insurers to offer covers.

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A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

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Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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“When I was to get my Rs 20 lakh life insurance policy renewed, I was asked to pay Rs 4,800 more in November even as the benefits got reduced. My agent said the higher premium was on account on me being Covid-19 positive. How can I afford this,” asked 44-year-old Ratna Ugale* from Mumbai.

Sources said that the insurance regulator is looking into the matter. Customers are seeking parity in pricing and policy terms.

Why are insurers shying away?

Insurers told Moneycontrol, on condition of anonymity, that the primary reason for stricter underwriting on recovered patients is to ensure that loss ratios stay under control.

“We are not outright denying covers to all Covid-19 recovered individuals. It is just that such persons could be at a higher risk of developing lung-related complications. So, as insurers, we are taking a cautious approach,” said the underwriting head at a mid-sized general insurer.

Close to 5,30,000 claims worth Rs 8,500 crore have been filed so far with health insurers.

This would mean that any lung ailment would be treated as a pre-existing disease due to the Covid-19 strain and the policyholder would have to wait for up to two years to get claims related to this illness.

Similarly, Covid-19 has also been shown to cause long-term muscle pain. Hence, insurers are either excluding muscle ailments from coverage for Covid patients or adding a rider with an additional premium.

Kolkata resident Mayur Banerjee*, 36, a regular at marathons, said that since he is prone to muscle injuries, it was essential that his insurance policy cover them. But since he had tested Covid-positive in June 2020, Banerjee was made to opt for a critical illness rider with an additional premium of Rs 3,600 per annum.

“I was told that I am at risk of long-term muscle ailments and hence would be charged a higher premium. I had no option but to buy it,” he said. Banerjee tried to buy a family floater policy in addition, but was denied a cover citing “underwriting policies”. His wife and mother had also tested Covid-positive.

Same story for life covers

As for life insurance, those who had tested positive for Covid-19 are either turned away or being asked to pay a higher premium.

Chennai-based doctor Satish Raghavendra*, 39, recovered from Covid-19 in September 2020 and was planning to buy a life insurance policy soon after. Four months later, he is disillusioned with the sales process and says insurers are discriminating against those who have recovered from Covid.

“Shouldn’t the insurance regulator step in and mandate companies to offer policies to all customers? Just because I was hospitalised, insurers are not willing to give me a policy. This leaves my family at potential risk,” he added.

Raghavendra said that he had checked with seven life insurers of which only two had agreed to offer a policy. However, the list of exclusions in these policies were high and premiums were also 30-45 percent higher than what they charged in the market.

Doctors and other frontline health workers are considered the most high-risk category by insurance companies even as the vaccine rollout is to begin on January 16.

For Raghavendra, Banerjee, Thevar and several others who recovered from their battle with Covid, there is now a longer battle to be fought buying insurance.

*Names changed on request

 
M Saraswathy is a business journalist with 10 years of reporting experience. Based in Mumbai, she covers consumer durables, insurance, education and human resources beat for Moneycontrol.
first published: Jan 12, 2021 04:34 pm

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