Though both these products target claims for covid-19, Rakshak has not been made mandatory by the Insurance Regulatory and Development Authority of India (Irdai), which means insurers can decide whether they want to offer the product or not.
With two standard policies for covid-19, you may find it difficult to pick the one that suits your needs. Read on to know if you must go for the Corona Rakshak policy
What does Corona Rakshak offer?
Like Corona Kavach, Corona Rakshak too offers three policy tenures—105, 195 and 285 days. The minimum entry age is 18 and the maximum 65 years and there’s a 15-day waiting period. You can opt for a sum insured between ₹50,000 and ₹2.5 lakh in multiples of ₹50,000.
The policy will pay 100% of the sum insured if the policyholder is hospitalized for 72 hours on positive diagnosis for covid-19 from a government-authorized diagnostic center. For instance, if you opt for a ₹2.5 lakh sum insured, on hospitalization for covid-19 for three days, you will get a lump sum of ₹2.5 lakh.
Once 100% of the sum insured is the paid, the policy will terminate. The policy is available on an individual basis only and does not have the floater option.
Unlike regular health insurance plans, the Corona Rakshak policy cannot be renewed. You also don’t have the option to migrate or port the policy from one insurer to another.
How do the premiums compare?
You already have less choice here as only a few insurers are offering Corona Rakshak. According to the rate card shared by insurers, we found that premiums for the Rakshak policy Future Generali India Insurance Co Ltd are on the lower end of the spectrum compared to Star Health and Allied Insurance Co. Ltd.
For a 31-35-year-old individual with a sum insured of ₹2.5 lakh, which is the upper limit, the policy from Future Generali costs ₹321 for a tenure of 3.5 months and ₹512 for a tenure of 9.5 months. For a 61-65-year-old individual, the same product costs ₹880 and ₹2,189 for 3.5 and 9.5 months, respectively. However, Star Health has priced the policy at ₹3,846 for 3.5 months and ₹5,192 for 9.5 months, irrespective of the age group one falls under. Rates exclude taxes.
“The rate of infection is only increasing and on testing positive, we’ll have to pay the full sum insured. One can get hospitalized even for mild symptoms and once that happens we’ll have to settle the claim. The fact that we are a standalone health insurer means that we’ll have more claims coming our way. We’ve priced the product considering all these aspects,” said S. Prakash, managing director, Star Health and Allied Insurance.
Note that depending on the pre-existing diseases and co-morbidities, the insurer may choose to apply a loading on the premium or choose to not sell the policy to you.
Should you buy?
Understand that it may not be right to compare the Corona Kavach with the Corona Rakshak policy because both the products have different purposes. While the Kavach policy (indemnity) will pay for your hospitalization expenses, the Rakshak policy (defined benefit) is a means for income replacement.
Mahavir Chopra, founder, Beshak.org, an independent research platform for insurance buyers, said people who have a policy with a lower sum insured or with any room rent limits could consider the Corona Kavach policy. Sub-limits could result in proportionate deductions whereas the Kavach policy does not have any sub-limits. “If you have pre-existing diseases and are lucky to get a policy then it could work in your favour as you will be covered after only a 15-day waiting period,” he said.
Corona Rakshak could suit you if you already have a health insurance policy but feel that a positive diagnosis for covid-19 could result in loss of income. “It works for people looking at income replacement due to hospitalization. Also, any deduction that happens on the health insurance claim can be supplemented with this benefit-based policy. In regular health policies, sometimes PPEs (personal protection equipment) and other consumables may not be covered. This is where Rakshak could help,” added Mahavir.
If you already have adequate health insurance, going for Corona Rakshak makes sense for replacement of income because premiums are only around 1-2% of the sum insured in the case of most insurers. But it’s important to note that one must get hospitalized for 72 hours to be eligible for a claim.
Naval Goel, CEO and founder, PolicyX, an online insurance aggregator, said if you have a regular indemnity based policy, you should buy Corona Rakshak to avail benefits of fixed cost or if you’re the sole breadwinner in the household. “Don’t forget that most indemnity-based policies cover coronavirus. If you do not have any health insurance coverage, then you should look at buying the Corona Kavach policy. Corona Rakshak is ideal if your hospitalization may impact the household’s financial situation. It acts as an income replacement plan.”
Chopra said from a policyholder standpoint, a 72 hours hospitalization period is reasonable. The only thing that one must compare is the premiums because the product is standard across insurers but the cost could vary largely. Also, keep in mind that in case of individuals with underlying conditions, buying these policies may not be easy but if you’re already covered under a health insurance plan, there isn’t too much to worry about because all regular health insurance plans cover covid-19.