Covid-19: Health and term insurance covers gain traction2 min read . Updated: 31 May 2020, 04:29 PM IST
- In the wake of covid-19, people are taking health insurance more seriously and are preferring term plans over others life covers
The covid-19 pandemic has changed the health and life insurance landscape in many ways. People are now taking health insurance more seriously and are preferring term life insurance plans over others. Now that the over 60 days of nationwide lockdown is finally set to end in a relaxed manner, starting 8 June, insurers believe that the new trends that have surfaced in the last couple of months will continue even in the post-covid era.
Experts Mint spoke with said that the fear of getting infected has now pushed people to realize the importance of having adequate health insurance. Amit Chabbra, health business head, Policybazaar.com, said the adoption of health insurance has seen a significant jump ever since the lockdown started. “The awareness around health insurance was quite low before covid-19 but now more and more people are buying it. Earlier, there was a lot of procrastination but now there’s an urgency driven by the fear of contracting covid-19," said Chabbra.
Policybazaar has seen demand for health insurance policies go up by almost 40% compared to the same time last year. Chabbra said people are also looking to buy a policy with higher sum insured. “Before covid-19, people were happy with a sum insured of ₹5 lakh-10 lakh but now people are going for a cover of up to ₹30 lakh-40 lakh. Some are even opting for a ₹1 crore cover," he said.
To cater to social distancing which is now the new normal, insurers are relying heavily on digital tools. Milind Kolhe, chief underwriting and reinsurance officer, Bharti AXA General Insurance Co. Ltd, said for settling reimbursement claims, they are banking on soft copies of original bills sent by third-party administrators (TPA) and if everything is in order, the payment is being disbursed. “We do plan to verify the original documents sent by the TPA once the lockdown is lifted," said Kolhe.
Renewals too have gone up in the last couple of months. Kolhe said earlier people would buy a policy and would forget renewing it. The fear of covid-19 and the increasing healthcare costs has pushed people to take policy renewal seriously.
There is a considerable shift in the kind of products life insurance companies have been selling since the lockdown first set in. Term insurance plans, which are pure protection products, have seen an uptick and insurers believe the trend will continue going forward.
“There is a clear shift in terms of product preference from a customer standpoint. Demand is moving from savings to protection products. Same time last year (April-May), protection policies accounted for less than 10% of the total policies we sold, but this year, pure protection policies make for 50% of our total business in the two months," said Rushabh Gandhi, deputy CEO, IndiaFirst Life Insurance Co. Ltd.
There are two reasons why term plans have picked up. First, the fear that covid-19 has brought with it, especially for individuals with financial dependants. This has resulted in more demand for term plans. Second, the fact that people want to keep away from par plans.
Gandhi believes the uncertainty around income has pushed people towards guaranteed products. “Non-par products are becoming popular too because of the market volatility. People are seeing Ulips (unit-linked insurance plans) as risky," said Gandhi. The fact that term and guaranteed policies have a simpler product construct is another reason why they’re gaining traction, added Gandhi.