Life Insurance Policy Rule Change: A life insurance is important for every individual, to secure himself or herself and the family financially. It is one of those indispensable parts of life, that everyone wants to go for. However, if you are planning to buy a new life insurance policy, and you have recovered from Covid-19 recently, you will have to wait for three months. According to a report on Friday, insurers are making the waiting period requirement applicable for coronavirus cases like other ailments. This is a new addition to the standard practice, which requires people to wait for a specific period with respect to certain ailments and diseases to gauge the risk before selling a policy.
According to a PTI report quoting industry experts, the waiting period for individuals, who have recovered from coronavirus infection, in order to take a new insurance policy has been implemented against the backdrop of high mortality rate related to coronavirus infection.
Reinsurers have asked insurance companies to bring coronavirus infection cases also under the standard waiting period norms as high mortality rates have impacted the reinsurance business. The waiting period is about one to three months, they added.
Reinsurance players provide the cover for insurance policies issued by insurers.
Sumit Bohra, President of the Insurance Brokers Association of India (IBAI), said Indian insurers do not have the capacity to write all these risks. So, most of the insurance policies that are above Rs 10-20 lakh are reinsured and the reinsurers want “good risk to come into the system" due to which the waiting period has been made applicable for coronavirus infection cases also, he noted.
“The term insurance plans are reinsured by the life insurance companies and given the last two years and the kind of experience that the industry has seen in terms of claims, this is a requirement that has been raised and put in place by the reinsurance companies. So we need to have this rule coming into force with immediate effect," Karthik Raman, Product Head of Ageas Federal Life, said.
According to Bohra, coronavirus infection has also been included in the list of ailments where waiting period will be applicable since the mortality rate is high due to the infection.
“Previously, the mortality rate was less and there was acceptance for more risk. Any amount of premium is not good enough to pay the claims if the mortality rate is going to be high. With COVID, it is not like a simple cold or flu.
“It is damaging other parts/ organs of the body as well, especially the lungs. So, it is difficult to gauge the survival rate if a policy is being issued for a longer period of time," Bohra said.
During 2020-21, the country’s largest life insurer LIC gave over Rs 442 crore as reinsurance premium, up from Rs 327 crore in the previous fiscal. Private sector players together ceded Rs 3,909 crore as premium towards reinsurance, up from Rs 3,074 crore in the preceding financial year.
(With PTI Inputs)