Renewed interest in covid-specific insurance plans with an increase in infections

Over the past three years, insurers have launched several types of covid-specific insurance plans to respond 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 a benefit plan that reimburses the costs of hospitalization and home care, while ‘Corona Rakshak’ is a fixed-fee plan that pays a lump sum if the hospitalization lasts a certain number of days. Insurers were hesitant to offer ‘Corona Rakshak’ but saw strong demand for ‘Corona Kavach’. On the group side, employers offered covid-specific death coverage to their employees, in addition to their existing group term life insurance policy. Some companies also offered a covid-specific upgrade plan, which employees could use after their basic insurance plan coverage was exhausted. In addition, a few e-commerce platforms offered a fixed-benefit version of the covid health plan, where a lump sum payment was made after the diagnosis of the disease.

Benefits 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 coverage. In addition, these plans are not viewed as annual recurring costs, as they focus on a more immediate problem. For businesses, this can be a relief, as they can call on emergency funds without impacting their annual budgets. A third advantage of covid-specific plans is that some offer additional coverage not found in standard health insurance plans, such as home treatment and no room rent limits. This can help improve 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, coverage is limited to only one disease. In general, the cost of buying multiple health-specific insurance plans is higher than the cost of a single comprehensive health insurance plan because distribution and administration costs are duplicated. Another problem with covid-specific plans is that they can 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 another serious viral illness. In addition, covid is known to affect the immune system, which months after the initial infection can lead to other serious illnesses, such as heart attacks, that may not be covered by a covid-specific plan. Finally, covid-specific plans are non-transferable, which means time spent on a covid plan cannot be used towards the waiting period of a standard health plan.

There has been an increase in questions about covid-specific insurance plans lately, but insurers are in no rush to launch new plans just yet. I recommend using the covid pandemic as a trigger to evaluate your overall insurance coverage. This is a good time to determine whether you are adequately covered for health and life, including in the event of severe covid with prolonged hospitalization and ICU care.

If you don’t have personal health insurance, now is a good time to consider purchasing it. There are several disease specific plans apart from covid including dengue, cancer, etc. These plans are best viewed as additions and not replacements to a comprehensive basic 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 Chief Officer and Managing Director at SecureNow.in.