PremiumUse the covid pandemic as a trigger to evaluate your overall insurance coverage. This is a good time to determine if you are adequately covered for health and life, including in the case of severe covid with prolonged hospitalization and ICU care.
There has been a surge in covid cases in neighbouring countries, leading to increased concern about masks, vaccines, and covid-specific insurance plans. One reason for low insurance uptake is that insurance is often seen as covering events that are unlikely to happen in the future. However, covid-specific plans address this perception. The fact that most households have had at least one member affected by covid, makes it a more likely event. Furthermore, the risk of covid is imminent, as seen in the previous waves of the virus when cases multiplied quickly. For these reasons, people are more interested in purchasing covid-specific insurance plans as a way to hedge against the risk.
In the past three years, insurers have launched several types of covid-specific insurance plans in response to the urgent need for coverage. On the individual side, two standardized plans called ‘Corona Kavach’ and ‘Corona Rakshak’ were introduced by the regulator. ‘Corona Kavach’ is an indemnity plan that reimburses expenses related to hospitalization and at-home care, while ‘Corona Rakshak’ is a fixed benefit plan that pays a lump sum if hospitalization lasts for a certain number of days. Insurers were hesitant to offer ‘Corona Rakshak’ but saw a strong demand for ‘Corona Kavach’. On the group side, employers provided covid-specific death coverage to their employees, in addition to their existing group term life insurance. Some companies also offered a covid-specific top-up plan, which employees could use after exhausting their base group health plan coverage. Additionally, a few e-commerce platforms offered a fixed benefit version of the covid health plan, where a lump sum payment was made simply upon diagnosis of the illness.
Advantages of covid-specific insurance plans
The main advantage of covid-specific insurance plans is their low cost compared to comprehensive health insurance plans. This makes it easy to budget for the coverage. Additionally, these plans are not seen as an annual recurring cost, as they are targeted at a more immediate concern. For companies, this can be a relief as they can draw on contingency funds without affecting their annual budgets. A third advantage of covid-specific plans is that some of them offer additional coverage not found in standard health insurance plans, such as at-home treatment and no room rent limits. This can help to enhance coverage in a meaningful way.
Disadvantages of covid-specific insurance plans
One of the main drawbacks of covid-specific insurance plans is that they are not cost-effective. While the absolute cost may be low, the coverage is limited to only one illness. In general, the cost of purchasing several disease-specific insurance plans is more than the cost of a single comprehensive health insurance plan because the distribution and administration costs are duplicated. Another issue with covid-specific plans is that they may give people a false sense of security. Covid is just one of many infections, and some health claims have been rejected because the patient had a different severe viral illness. Additionally, covid has been known to compromise the immune system, leading to other severe illnesses such as heart attacks months after the initial infection, which may not be covered under a covid-specific plan. Finally, covid-specific plans are not portable, meaning the time spent in a covid plan cannot be applied towards the waiting period of a standard health plan.
There has been a recent increase in inquiries about covid-specific insurance plans, but insurers have not yet rushed to launch new plans. I recommend using the covid pandemic as a trigger to evaluate your overall insurance coverage. This is a good time to determine if you are adequately covered for health and life, including in the case of severe covid with prolonged hospitalization and ICU care.
If you do not have personal health insurance, now is a good time to consider purchasing it. There are several disease specific plans, apart from covid, which include dengue, cancer, etc. These plans are best viewed as supplements and not a substitute to a base comprehensive plan.
It is important to address the immediate threat of covid, but it is also important to plan for the long term.
Abhishek Bondia is principal officer and managing director at SecureNow.in.
