COVID 19 exposed us to the blatant uncertainty surrounding human lives and nudged us into the reality of how the loss of an earning member causes immense financial distress to a family. Along with the emotional pangs that follow the loss of a dear one, we saw several families facing financial crises, affecting both – their savings and their living standards!
Many of us hence have decided to start investing in a life insurance policy, lest any such uncertainty quakes our lives again. But does being COVID positive skew our chances of being eligible for a life insurance plan? This is a valid doubt, since latest medical reports reveal that the virus can damage the lungs, heart and brain, which increases the chances of long-term health problems – making one a bad risk for the insurance companies.
In the long run, post-COVID complications might have a direct impact on life insurance premiums or in worst cases policies may be deferred for customers with a poor health record.
According to Suresh Agarwal, Chief Distribution Officer, Kotak Life Insurance, “The impact on premiums due to any illnesses are based on years of research and is backed up with actual experience of insurance and reinsurance companies. However, in case of COVID, it is still a relatively short period. So it is difficult to factor it in the premium rates.”
Currently, the generally followed underwriting norms are that if the customer is based in or has traveled to a place that has a high incidence rate of COVID, then the proposal could be deferred, he adds.
Atri Chakraborty, Chief Operating Officer IndiaFirst Life Insurance Company, agrees: “There is no impact on premium for an illness like Covid-19. However, a customer who has been exposed to Covid-19 will be offered coverage post more medical checks / deferment period.”
But if one is already continuing with their existing life insurance policy, the effect of being COVID positive isn’t much, if timely renewals are made.
As per Chakraborty, “For policies that are in continuous mode of renewal and stay in-force without a break, there is no impact. However, for policies that have crossed the grace period and are in lapsed status, there would be an impact wherein parameters like whether it was a symptomatic or asymptomatic exposure, or whether the person was under a simple quarantine at home, or an institutional one or if hospitalization was required – would be factors influencing and deciding the course of the policy.”
Once a policy is lapsed, or one is to buy a new policy, a declaration of health and pre-existing conditions is a must.
Here, the buyer would have to declare the COVID 19 treatment history, on the basis of which the insurer would decide how eligible she/he is for a life insurance policy.
“A life insurance contract is based on the principle of ‘utmost good faith’. Thus, it is imperative and in the interest of the customer to disclose all health related conditions transparently in order to ensure that there is no risk of repudiation of claim. Even after the policy is issued, the customer must inform the insurance company in case of any material health issue diagnosed during the tenure of the policy or in case of revival of the policy,” Agarwal says.
Although COVID-19 may have adverse impacts on our physical and financial health, there is still scope to secure our financial stability with a life insurance policy. Being honest with our health declarations and timely renewals would ensure our families with a reliable financial safety net in times of despair.
(Elizabeth Mathai is a Kochi-based content creator and a therapist, with expertise in insurance)
Also read : How to make the most of your employer health insurance policy
