How should you insure yourself amid Covid-19?

Mr. Rakesh Goyal, Director, Probus Insurance Broker Limited

There have been unprecedented health crises going on in the country. While on one hand people are being vaccinated to protect themselves against novel Coronavirus, on the other hand looking at the visuals on the news television—it seems the health infrastructure in India has completely broken.

This crisis has given an opportunity to several investors to improve past errors of their personal finances. Typically, Indian invetsors have low coverage for life insurance and general insurance-especially health insurance.

Insurance penetration and density reflects the level of development of the insurance sector in a country. Globally, insurance penetration is measured as the percentage of insurance premium to gross domestic product (GDP), while insurance density is calculated as the ratio of premium to population (per capita premium).

Insurance penetration in India at current prices has increased from 0.61% in 2009–10 to 0.89% in 2018–19.7. Insurance density has increased nearly four times from Rs 329 to Rs 1,287 between 2009–10 to 2018–19.

To address the issue of low penetration, Insurance Regulatory Development Authority of India (IRDAI) has announced several standard products for term plans and Corona specific cover. Policyholders who are looking to start the buy insurance products and cannot afford higher coverage should certainly look at such products.

Everyone should have an exposure towards term plans, if you don’t want to take higher cover or premiums are high, they should go for standard term plans and increase the coverage in the years to come. While people who do not have any health insurance cover should start buying Arogya Sanjeevani—a standard term plan.

Under this term plans one can buy an individual or even a family-floater plan. However, for both, Arogya Sanjeevani provides coverage from a minimum of Rs 50,000 to a maximum of Rs 10 lakh. But what if people have lower sum insured of just Rs 1 lakh or ay Rs 3 lakh?

Given the situation when policyholders have lower sum insured, it is important to have top-ups or super top-ups. While top-up cover provides additional cover over the above current limit at much lesser premiums. For example, if someone has a health policy of Rs 1 lakh and top-up plans for another Rs 4 lakh (total coverage Rs 5 lakh) and hospital bill comes at Rs 2 lakh, Rs 1 lakh will be paid from the base policy and remaining Rs 1 lakh from the top-up policy.

In the current scenario if someone wants to buy pure Covid-19 cover—they should look at buying Corona Kavach and Corona Rakshak.  The regulator had allowed insurance companies to come out with Corona Kavach, which is an indemnity plan and will cover all the hospitalisation expenses. The sum insured in Corona Kavach policy ranges from Rs 50,000 to Rs 5 lakh. While Corona Rakshak, is a fixed benefit plan in which if policyholder is diagnosed with Covid-19 and hospitalized for three days then a fixed amount (which is sum insured) will be paid by the insurance companies.

In the current situation, one should atleast have enough coverage through term plans and proper health insurance. If any of the above policies are missing in your portfolio—one should not wait and immediately buy the policies for betterment of their family.

 Views expressed in this article are the personal opinion of Rakesh Goyal, Director, Probus Insurance.

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