Are unprecedented pandemics covered under health insurance?

WHO states that some policies will not cover treatment costs if the illness is declared an epidemic/pandemic. Let’s see what IRDAI says.

Are unprecedented pandemics covered under health insurance?

Global pandemics are a matter of chance. There’s no guarantee when, where, or how an outbreak will occur. And it is at times like these that human lives are lost while the economy takes a terrible hit. The novel coronavirus or COVID-19 is one such pandemic that has affected countries all over the world. 

As stated by the World Health Organization (WHO), if a disease is declared as an epidemic or pandemic, health insurance providers can choose to exclude it from insurance policies. So what happens in case you get infected? Will your health insurance cover treatment costs during the COVID 19 epidemic? 

In a country where the outbreak has spread to the remotest corners, IRDAI (Insurance Regulatory and Development Authority of India) has taken measures to safeguard the citizens. On 4th March 2020, IRDAI stated that all claims related to coronavirus would be handled with utmost care. All expenses for treatment, from quarantine, till the situation stabilises, will be covered by health insurance providers via regular and need-based plans. 

Related: How to prepare yourself financially during a pandemic

As a citizen who might be susceptible to contracting the disease, here are some underlying specifications that you must know: 

If a disease is declared a pandemic by WHO 

According to WHO, if a disease is declared as a pandemic, some health insurance policies might not cover its treatment costs and medical expenditures. And coronavirus has indeed been declared as a pandemic by WHO. A worldwide spread of this life-threatening disease has taken countless lives across the globe. In such cases, a policyholder who contracts COVID-19 might have to bear the cost of treatment from their pocket as health insurance providers often exclude such claims from their policies. 

However, it is best to check with your individual health insurance provider first. Some providers like SBI General Insurance are not rejecting claims as long as certain minimum requirements are met. Likewise, there are other health insurance policy providers who provide cover against epidemics. So do not panic; read your policy document carefully and contact your provider in case you see symptoms. 

If you test positive for COVID-19 

In case a policyholder gets infected with the virus and is in quarantine, they will be covered under IRDAI’s recent mandate. The circular states that insurance providers will have to cover medical bills even for policyholders in quarantine if they test positive for COVID-19. The treatment cost while practising social distancing measures can be claimed under hospital expenses. But this can be claimed only under a regular health insurance policy.

In India's current capacity, the government has capped Rs 4,500 for testing of Covid-19 in private hospitals or labs, including screening and confirmatory tests. There has been no statement on the government footing the bill for treatment costs. 

For the sake of reference, a health insurance provider might ask for your travel history. This will have no impact on your claim. Coronavirus stems from a strain of influenza virus where every 300 years or so a cross-species virus spreads from animals to humans. And since COVID-19 does not fall under the category of critical illness, holders of a critical illness policy will not be liable to claim expenses if they test positive. 

Specific need-based policy

With more than half the world’s population under lockdown due to the coronavirus outbreak, insurance providers are being pushed to design more need-based policies. IRDAI is encouraging insurers to curate a coronavirus-specific policy. Under this policy, a holder, if tested positive, will be entitled to receive the full insured amount for the treatment of the illness. The policy will expire post the treatment. 

In case you are quarantined during this time with an active coronavirus-specific policy, you will be entitled to 50 percent of the value insured. This is done to help policyholders who might lose partial or complete income during a lockdown. Please note that this policy comes with a list of terms and conditions that must be read carefully before purchase. 

Related: Precautions that senior citizens should take during the COVID-19 pandemic

To be eligible for a claim, the following conditions apply:

  • The individual should not be (or not have been) in contact with a person showing symptoms of COVID-19 for the entire duration of the policy.
  • The insured person or their family members should not have travelled to any coronavirus hotspots such as China, Italy, Japan, Singapore, Taiwan, Thailand, Macau, Hong Kong, Iran, Bahrain, or Kuwait after 1st December 2019. 
  • Those suffering from coronavirus symptoms like cough, cold, fever with body ache, or respiratory diseases during the six weeks prior to purchasing the policy will also not be entitled to a claim. 

With many such exclusions, those with an active standard health insurance plan need not purchase a coronavirus-specific plan, especially after IRDAI’s circular on claims relating to quarantine cases. Those without an existing health insurance plan who may be susceptible to contracting COVID-19 can consider buying such a need-based policy. However, it is advisable to read the fine print before making a decision. 

Related: 8 health insurance jargons explained

Planned treatment

If you have been suffering from a respiratory illness for four weeks or more and decide to seek treatment for it, your health insurance claim might not be settled. This is valid for both regular health insurance and need-based coronavirus-specific policy holders.

Similarly, if you are already infected with the virus and wish to purchase a health insurance policy, such claims will not be settled under the new policy. Any existing treatment plans (that is, planned before you purchased the policy) are not covered under a new health insurance policy, regular or specific. 

A rapidly spreading respiratory disease, COVID-19 has been certified as a pandemic by WHO. These times can be disruptive and tough for not just individuals but economies as a whole. The most effective way to secure your health is to plan ahead. But it is also important to pay close attention to guidelines issued by the the Government of India and state governments. Follow social distancing and abide by lockdown rules. On the side, you can reach out to your health insurance provider, in case you have an active policy, to check if they offer cover during epidemics. If not, you can consider buying a need-based policy to secure yourself and your loved ones. Here's why insuring your health is a smart decision.


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