While the policy features and wordings are the same across insurers, Mint found that there’s a stark difference in the way insurers have priced the product (see graph).
If you are planning to buy the policy, read on to know the product features and how the premiums compare among insurers.
The minimum entry age for the policy shall be 18 years and the maximum 65. Dependant children shall be covered from the age of three months to 25 years. It also comes with the family floater option.
The policy tenure could be 3.5 months, 6.5 months, or 9.5 months, including the 15-day waiting period, and health insurance rules such as lifelong renewability, migration, and portability shall not be applicable.
The minimum sum insured will be ₹50,000. You can opt for a cover in multiples of ₹50,000, up to ₹5 lakh.
The cost of treatment for any co-morbid condition, including pre-existing co-morbid conditions along with the treatment for covid-19, shall be covered.
The policy has no sub-limits on room rent, which is an advantage. Capping of room rent usually results in increased out-of-pocket expenditure. It also has a bearing on other associated costs such as nursing and doctors’ fees. The policy comes with an optional hospital daily cash cover in which the insurer will pay up to 0.5% of the sum insured for every 24 hours of hospitalization. The benefit will be payable for up to 15 days during a policy period.
The policy will pay for hospitalization expenses incurred by the policyholder for the treatment of covid-19 on a positive diagnosis for the infection from a government-approved diagnostic centre. You can find further details on what the policy will cover here.
The policy covers costs of at-home treatment, provided the medical practitioner advises home treatment and there is a continuous active line of treatment, which requires monitoring of health status by a medical practitioner.
What it costs
In line with the 10 July deadline, some insurers have started selling the product.
Irdai had left it to the insurance companies’ discretion to decide the premiums. Mint analyzed the premium rates shared by the insurance companies across age groups and found that public sector insurers such as Oriental Insurance and United India Insurance have priced the product at the lower end of the spectrum, whereas Go Digit and Star Health are at the higher end, with a more conservative approach.
For an individual between ages 36 and 40 years, for a sum insured of ₹5 lakh and tenure of 9.5 months, Oriental Insurance has priced the base product at ₹1,286 plus taxes, whereas Go Digit General Insurance has priced it at ₹17,573 plus taxes. Star Health and United India have priced it at ₹5,172 and ₹2,029, respectively, excluding taxes.
“There is a huge variation in rates among insurers. I think inadequate data on claims and the infection itself is a reason for the variation. Some amount of conservatism reflects in the way most private insurers have priced the product, especially when you compare the rates with PSUs,” said Abhishek Bondia, managing director and principal officer, SecureNow.in.
Other than the 5% discount mandated by the regulator for all healthcare workers, a few companies are offering discounts on the aggregate premium for family floater plans and if the purchase is made online without the involvement of an intermediary.
“Another factor to consider is the discount offered for the family floater variant. One of the public sector insurers has offered up to 90% discount to add family members. This makes it very cost-effective to do so,” added Bondia.
On comparing the rates for the older age groups, you’ll find that the difference in premium is sharp. For individuals between ages 56 and 60 years, for a sum insured of ₹5 lakh over 9.5 months, the premium charged by Oriental insurance is ₹1,714 plus taxes, whereas Go Digit has priced the same policy at ₹43,080 plus taxes.
Note that if you go for the optional cover, the premium will have to be paid over and above the premium for the base policy. For the same tenure, age, and cover, Oriental is charging a premium of ₹155 for the optional cover and Go Digit is charging ₹2,800.
Bondia said private insurers could lose out on market share for the product because of the high premiums. Early analysis shows that premiums for the Corona Kawach policy exceed that of the Arogya Sanjeevani policy, in case of a few private insurers such as Star Health.
“My sense is that the target audience for Corona Kavach is the bottom rung of the population who cannot afford a health insurance plan. In most cases, the policy will be cheaper than the comprehensive health plans or the flagship plans of insurance companies. In most cases, it’ll also be lower than Arogya Sanjeevani,” said Amit Chhabra, health business head, Policybazaar.com.
Experts said some insurers may choose to keep the premiums high if they don’t want to attract buyers towards a covid-specific policy. Further, with co-morbidities, people over 50 years of age are more likely to get infected and, therefore, the premiums see a spike. Chhabra said since covid-19 is on the rise currently, the premiums for the tenure of 3.5 months are higher when compared to the tenure of 9.5 months because insurers expect some amount of control on the infection rate in the long term.
Compare the premiums
Bondia said premiums rates of some of the public sector insurers are significantly competitive as compared to select private insurers. “With benefits being identical, premiums are an important factor to choose an insurer. Most insurers have a wide network of cashless hospitals,” he said.
While the policy could work well for the uninsured, if you already have adequate health cover, you could give this product a miss. “If you have a ₹10 lakh-plus coverage, then you don’t have to supplement your policy with Corona Kavach. In case you’re under-covered, then going for a covid policy that isn’t very expensive will definitely help,” said Bondia.
If you are on a lower sum insured, it may make sense to buy this policy especially if you’re dealing with a cash crunch.