The proposed standard COVID-19 health insurance policy may now come in two variants. The Insurance Regulatory and Development Authority of India (IRDAI) has revised its draft standard product structure yet again, reverting to the original proposal of a base indemnity-based health policy plus a benefit-based optional add-on. Insurers will also offer an independent benefit-based product, with sums insured ranging from Rs 50,000-Rs 3 lakh, if the policyholder has to be hospitalised for at least three days, or 72 hours, after testing positive for COVID-19. Moneycontrol has reviewed copies of both the draft product constructs.
Besides, the new set of policies will now be available by July 15, instead of June 30 as proposed earlier.
This is the third such draft. The first one, which was an indemnity product, was withdrawn, to be replaced by a benefit-based policy. Now, insurers can offer both, provided the drafts are finalised in their current forms. An indemnity policy reimburses the amount actually incurred on hospitalisation to the extent of the sum insured, while a benefit product hands out a pre-agreed sum upon the diagnosis of the disease, either as a lump-sum or on a daily basis. Premiums will be determined by the insurers.
The standard, reimbursement health policy
As per the latest proposal, the indemnity plan’s base sum-insured will range from Rs 50,000 to Rs 5 lakh, offered over tenures of three months, six months and one year to individuals aged between 18 and 65. In the family floater plan, dependent children up to the age of 25 will be covered, apart from parents and parents-in-law. The cover will kick in after an initial waiting period of 15 days.
In the last three months, several insurers have often excluded the cost of personal protection equipment (PPE), masks and other consumables from the claim payout, leaving policyholders in a lurch. In this backdrop, the insurance regulator has specified that the policy will have to cover diagnostic costs, PPE kits, gloves, masks as part of hospitalisation expenses.
The base indemnity policy will pay for the actual cost of hospitalisation to the extent of the sum insured chosen. Though it is a COVID-19-focussed product, any co-morbidities – for instance, diabetes or hypertension – that need treatment during the period of stay, will be covered. Significantly, it will now also take care of home care bills, provided a medical practitioner has recommended this line of treatment. Diagnostic tests, medicines prescribed in writing, consultation and nursing charges as also the cost of the oximeter, oxygen cylinder and nebuliser will be covered. The benefit-based optional cover will hand out a pre-agreed sum – 0.5 per cent of the sum insured per day of hospitalisation, for up to 15 days. It can come in handy for sundry expenses such as food, accompanying person’s travel expenses and so on, as there are no restrictions on how policyholders can utilise this hospital daily cash. You will have to pay an additional premium to get this optional cover.
Fixed benefit standard COVID-19 health product
The independent benefit-based product will pay out the entire sum insured if a policyholder is hospitalised for a minimum period of three consecutive days, or 72 hours, after testing positive for COVID-19. This leaves out those quarantined at home. The cover will come into play after the initial waiting period of 15 days. The tenure options for this individual policy will be three months, six months and one year. A policyholder cannot purchase multiple plans. Like any other fixed benefit plan, it will cease to exist once the claim is paid out. The claim will be settled within 30 days of discharge from the hospital after being diagnosed positive for COVID-19.
IRDAI’s latest proposals are vast improvements over the earlier drafts, but constant revisions have delayed the process and diluted the utility of a product that is needed at the earliest. The new indemnity policy will clearly cover PPE and other consumable costs, which is in favour of customers. There are no sub-limits on hospital room rent either, which will reduce chances of heartburn at the time of claim settlement. However, two sets of policies covering solely COVID-19 claims could give rise to confusion amongst policyholders.
A simple benefit-based product is preferable as it hands out the entire pre-agreed sum to policyholders, ensuring smooth claim settlement.
However, the insistence on 72-hour hospitalisation in the fixed benefit product is a limitation that needs to be eliminated, considering that home care is picking up across states. To be sure, the draft indemnity-based policy offers home care.
Existing policyholders concerned about their insurers not settling the full claim amount due to deductions and exclusions can also buy the benefit product, in addition to their existing policy, to make up for any shortfall in claim settled due to deductions or exclusions.
This apart, besides investing time and energy in devising new product structures, the IRDAI would do well to step in to alleviate current concerns of existing policyholders. They are suffering due to disputes between hospitals and insurers, especially over charges of PPE, masks, gloves and so on. Many have ended up paying from their pockets.