Questions people may ask on Insurance during crisis time of Covid-19
Posted: Apr 05, 2020
Recently Insurance Samadhan did a Facebook live session to clarify the doubts on Insurance Policies with respect to Covid 19 and locked down for 21 days. We could answer many questions and compile the same for the general interest of the public. However, a brief understanding is given below:
Life Insurance Contract is a universal contract only with one exclusion of suicide in the first year of the policy. In all other cases, insurance covers all perils including the threat of virus-like covid 19. So those who are insured should not have any worries.
Health Insurance is an indemnity contract and covers all treatments including that of Covid 19. The health insurance contract may have some specific exclusions but all old contracts would not have exclusion of Covid 19 because this disease was not known. However, most Health Insurance contracts do have a clause of Force Majeure including the impact of the pandemic. But this exclusion can not be applied without the approval of regulator IRDA. Till date, IRDA has appealed to all Insurance Companies to expedite case settlement of Covid 19. So the public should not worry on the front of the application of Health Insurance. It is possible that Health Insurance may include exclusion of Covid 19 when you are applying a new Insurance Policy.
Public staying abroad should also not worry because their travel insurance covers all treatment including Covid 19. This seriousness was not a known risk when you travelled abroad.
However, Health or Travel Insurance would have a limitation of Sum assured because one may need a Single room or ventilator service which may exhaust Sum assured very fast. Please note that Single Room increases the cost of treatment by at least 35% thus reducing the number of days of treatment.
So whether you are in India or abroad, you need to use your insurance injudicious way so that your applicable sum assured remain with you. We also need to be aware that Covid 19 spreads faster in family members. If your family is covered through Family Floater, you need to use total sum assured after consultation with your Insurer so that you are ready for any exigencies.
General Insurance is again an indemnity contract and covers specific Perils like fire, flood, a natural calamity. Insurance Companies offer Loss of Profit policy – which covers the risk of business loss due to closure of factory, warehouse, shop etc because of specific peril of fire or flood or natural calamity. Hence business loss due to Covid 19 will not be covered under Loss of Profit policy.
Covid 19 may offer business opportunities to Insurance Companies to design Policies covering risks like Covid 19 and many companies may be filing products with IRDA. Religare and Digit have already launched Health Cover under critical illness covering Covid 19. These products have their terms and conditions which need to be weighed before making any decision.
Insurance Samadhan tried to do initial research and have observations as detailed below :
Life Insurance : At the outset, life insurance is not an indemnity product and has no exclusion of epidemic or pandemic. Hence all life insurance claim are admissible without any exclusion.
Critical Illness: Covid -19 does not fall under critical illness hence it will not apply. However, Covid 19 may cause damage to the kidney which is covered under critical illness. In case the kidney is damaged and the patient survives for 30 days then critical illness claim is admissible.
Health Insurance: IRDA has given clear instructions to expedite claims of carona virus and all Health Insurers have agreed to abide and have made special provisions to pay claims if a patient is admitted for over 24 hours. However, health insurers have all legal right to refuse to pay as carona virus is declared pandemic. All indemnity products are subject to exclusions provided in Terms and Conditions of Policy Contract. Which means Insurers would take a decision on the basis of the magnitude of the problem. There will not be any hesitation to settle claims in early stages but they may change the stand if Carona virus spreads and reach to unmanageable magnitude.
At Insurance Samadhan, we find solutions to any insurance-related issue that include lapsed insurance policy, assistance in case of a settlement, claim recovery in case of insurance fraud,and much more. Visit us - https://www.insurancesamadhan.com