Life and health insurance policies welcome LGBTQ community, but not all is rosy, just yet

Many insurance benefits have not been available until recently through retail insurance plans for the general public.

After the Supreme Court decriminalised homosexuality in 2018, many workplaces started offering benefits of inclusivity – insurance being one critical perk to retain employees. As a result, group life and health insurance (offered to private groups such as employees, clients of banks and card companies, etc) policies have been customised for many companies for a few years now.

While homosexuality was decriminalised, same-sex marriage has not been legalised yet. As a result, many insurance benefits have not been available until recently through retail insurance plans for the general public.

But the scenario is changing. Both general insurance companies – that offer mediclaim, fire, vehicle insurance, etc – and life insurers, which cover the financial risk associated with the death of an individual, are now offering policies to LGBTQ+ members and same-sex couples, apart from live-in partners.

On June 28, National Insurance Awareness Day was celebrated towards the end of the pride month of June. Moneycontrol.com decided to examine access to insurance for same-sex couples and members of the LGBTQ+ community.

Floater policies

For same-sex couples seeking a mediclaim floater policy – one common health insurance policy that covers the entire family and shares the sum insured – has been a major problem. Under a floater policy, any of the family member can make a claim during a health emergency, saving costs assuming that not all family members will fall ill and require hospitalisation at the same time.

In line with this principle, insurance companies are now offering health and motor insurance floater policies to same-sex couples too. "Exclusion from accessing floater health insurance policies was a significant issue due to non-conformity with traditional family definitions. Hence, we expanded the definition of family under retail offerings to now include live-in partners and same-sex couples," says Raghavendra Rao, Chief Distribution Officer at Future Generali India Insurance Company.

Even though health floater policies have been in existence for more than two decades, floater policies for vehicles were introduced only recently.

While many insurance companies declined to comment, a private insurer said that the company offers motor floater policies to vehicles owned by individuals residing on the same premises and possessing documents to certify the same.

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No separate underwriting for life insurance 

Life insurance is offered to everyone regardless of age, gender, or preferences, say insurance companies. Premiums are not based on gender.

"Underwriting costs are based on the risk assessment and the applicable mortality risk for a particular life. The underwriting cost for an LGBTQ person would depend on the demographic details of the person," says Piyush Trivedi, Joint President-Products, Kotak Life Insurance.

It hasn’t been proven whether being homosexual has an impact on your life cycle, and hence, there is no discrimination or bias in terms of pricing or offering insurance to the LGBTQ+ community.

"Our costs of policies do not differ based on sexual orientation. In general, the costs of life insurance policies are determined by underwriting rules such as risk assessment, claim settlement procedures, and internal policies," says Dr Mukund Kulkarni, Head – Underwriting, Aegon life insurance.

Even though the premiums don’t change, insurance companies expect individuals to mention the correct gender, and they would accordingly be a little stringent in assessing the risks associated with members of the LGBTQ+ community.

"Life insurers may be more diligent, medically and financially, when evaluating a transgender individual," says Karthik Raman, CMO and Head-Products, Ageas Federal Life Insurance.

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Joint life policies

However, a same-sex couple would have a tough time seeking a joint-life insurance policy, which is an insurance policy covering two people, and offers the sum assured (SA) to the joint policyholder in case of the death of the other holder.

"We offer joint life cover for spouses under our annuity and savings plans. Currently, the two individuals under a joint life insurance policy can either be spouses (husband and wife) or immediate blood relations," says Raman.

But it is best to understand if your insurance company offers these to same-sex couples, as everyone follows a different view. Joint-life policies help you save some funds as two lives are insured under one plan.

Kotak Life Insurance, too, offers joint life insurance under individual traditional savings and on the ULIP platform. "Relationships allowed between lives covered under a joint-life policy are as per the underwriting rules of respective companies," says Trivedi.

So, if you seek a joint home loan, you might not be permitted to take out a joint insurance policy.

Also read: Want to take out a life insurance policy? Here are the different types of term plans on offer

What documents should you hold?

No forms or separate documents are needed for the third gender to seek insurance, apart from the submission of a proposal form.

Terms and conditions are the same for all customers, say insurers. But the facts need to be mentioned correctly for the insurance contract to be valid. To ensure that the insurance contract isn’t considered invalid for hiding any "material" fact at the time of a claim, it is important that you mention the correct gender.

"For transgender individuals, the procedure is the same as for the other genders. They have to submit the right declaration as ‘transgender’ in the application form," says Raman.

Additional documents, such as health declarations, may be sought based on the health condition, which is a common practice for select high-risk individuals. Ensure you mention the correct details on these declaration forms.

Since same-sex marriage isn’t legal in India, steering past documentation and common proof is often a cumbersome task for insurance coverage. If you are seeking a joint-life or a health/vehicle floater policy as a same-sex couple, then you would need a joint bank account and proof of common address. But do check with your insurance company about the documents needed.

"The presence of a common bank account or shared address in the proposal form will be considered for communication or transactions. While it indicates a certain degree of shared financial responsibility or living arrangement, it is not the sole determining factor for a family floater policy," says Rao.

Also read: HDFC Bank viral video: Four classic insurance traps you must avoid

Nomination 

Life insurance is perhaps one of the many financial products, where the provision to nominate a "beneficiary" nominee has been offered. A beneficiary nominee under life insurance doesn’t just gain the right to receive the funds from the insurance company after the death of the individual but gains the right to keep the funds.

The good news here is that as per Indian law, individuals can nominate any person of their choice in their life insurance policy.

As Raman says, "For both same-sex couples or couples in live-in relationships, one partner can nominate the other partner as a beneficiary nominee under the life insurance policy."

But Moneycontrol.com found that different insurance companies have different policies on this matter. "With the evolving definitions of relations, same-sex couples can nominate a partner as a beneficiary subject to the nomination policies of the respective life insurer," says Trivedi of Kotak Life Insurance.

Hence, do check with your insurance company regarding the beneficiary nominee provision. It would be a wise choice to make a Will and mention the name of the person to whom you wish to offer the insurance money after your passing, as succession laws would take over if a person dies intestate (without leaving a Will).

Also read: How much life insurance do you need?