Here’s What You Need to Know About COVID -19 Cover

Jun 09, 2020

When the cases of COVID-19 were reported in March In India before Coronavirus was declared a pandemic, the Insurance Regulatory and Development Authority of India (IRDAI) had issued a circular to all insurers on guidelines on the handling of claims reported under coronavirus.

During that time, several senior executives made statements to news channels, including Mr Subramanyam Brahmajoysula, SBI General Insurance Head-Underwriting, and Reinsurance said, "Claims due to coronavirus are payable, provided the person concerned is hospitalised for at least 24 hours. Most of the health insurance policies in India do not cover outpatient treatment. However, if coronavirus is declared a pandemic by the WHO or the Indian government, claims might not be payable as such claims are excluded under many health insurance policies."

And when WHO characterised COVID-19 as a pandemic the IRDAI ensured that the insurers did provide support to individuals who were getting treated for COVID-19. A pandemic is a disease epidemic that has spread across a large region, for instance, multiple continents or worldwide. As per the current reports, the number of cases is on the rise, globally there are 7 million-plus and even in India, there are more than 2.5 lakh cases.

Demographically, India is one of the most populous countries in the world after China, and with the severity of COVID-19 within our country, the regulatory body through subsequent circulars mentions that the COVID-19 claims will be settled.

So, with regards to insurance claims, related to COVID-19, now the IRDAI has asked insurers strongly to devise appropriate insurance products that would protect from risks arising out of COVID-19. The authority is committed to the processing of such product approval applications on a fast track mode.

What has IRDAI proposed?

Finally, the IRDAI decided to mandate all general and health insurers to offer a standard individual COVID-19 health insurance product that will be a COVID-19 specific product addressing the basic health insurance needs of the public. The regulator has asked all general and health insurance companies to offer a standard COVID-19 policy, starting from 15 June.

(Image Source: Image by Miguel Á. Padriñán from Pixabay)

Features of the IRDAI's COVID cover

  • It is a one-year indemnity policy with the option of only two add-ons, as prescribed by the regulator.

  • The base cover of the policy will include hospitalization expenses incurred by the policyholder concerning the treatment of COVID-19. The policy is also supposed to cover expenses incurred on hospitalization under AYUSH medicine will be covered without any sub-limits under the policy.

  • Room, boarding and nursing expenses of up to 2% of the sum insured or a maximum of Rs 5,000 per day will be covered. Further, surgeon, anesthetist, consultants and specialist fees paid to the doctor or the hospital and blood, oxygen, operation theatre charges, diagnostic imaging modalities, and other similar expenses will be covered.

  • The intensive care unit and intensive cardiac care unit charges are capped at 5% of the sum insured, subject to a maximum limit of Rs 10,000 a day. Even the road ambulance charges are capped at Rs 2,000 per hospitalization.

  • As per guidelines claims related to the COVID-19 treatment (including the quarantine period) will be liable to get the coverage under this standard health plan.

  • Pre-hospitalization medical expenses incurred will also be admissible for a period of 30 days before the date of hospitalization. It will also cover the costs of diagnostics towards COVID-19. Post-hospitalisation medical expenses following an admissible claim, incurred for a period of 60 days from the date of discharge, will also be included.

  • The policy does not allow any deductibles. However, there's a fixed co-payment clause of 5% across all age groups.

  • The policy can be bought for an individual or on a family floater basis. The minimum entry age shall be 18 years and the maximum entry age shall be 65. Dependant children shall be covered from the age of three.

  • Insurance companies can determine the price keeping in view the covers proposed to be offered but the pricing has to be the same pan-India and no zone-based pricing is allowed.

Additional details:

There are two add on covers allowed to be offered along with the standard Covid-19 product: Quarantine Cover, and Hospital Daily Cash cover. The premium payable towards these 2 add-ons have to be specified separately to enable policyholders to pick, choose, and pay based on the need.

If the policyholder is quarantined due to diagnosis or suspected COVID-19 infection, then the insurer shall pay 1% of the sum insured a day, subject to a maximum of Rs 3,000 per day.

Note that either the hospitalization cover or the quarantine cover will be payable at a time, and not both.

If you opt for the hospital daily cash add on, the insurer will pay 0.5% of the sum insured for every 24 hours of hospitalization on positive diagnosis for COVID-19.

End notes:

The proposed COVID-19 Cover draft is for mitigating the risk arising out of the pandemic. The regulator is expected to come out with the final draft in the next few days.

For those who are uninsured, it's time to buy health insurance but be careful when you buy the standard COVID-19 health policy, given the co-pay clause and the fact that it only covers the novel coronavirus.

Remember, insurance is a tool purely for Risk Management and is an integral aspect in the exercise of financial planning and must be undertaken with utmost care. Buying insurance is a continuous activity. Every individual's needs change over a period of time. This in turn necessitates a review of your insurance requirement.

Remember, financial and health security are the basic tenets for an individual; the purpose of insurance is indemnification of risk from an untoward event. However, as far as wealth management is concerned, it is best to keep insurance and investment needs separate.

No matter how young you are, don't procrastinate about taking an optimal life insurance cover, as no one can foretell when life will change its course.

"Perhaps the best cure for the fear of death is to reflect that life has a beginning as well as an end."  - William Hazlitt.


Warm Regards,
Aditi Murkute
Senior Writer


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