COVID-19 pandemic may cut life policy cover

Life insurance companies have turned cautious and tightened underwriting norms for high-value policies in the wake of second wave of the COVID-19 pandemic and pullback by reinsurance companies citing low rates in India.

Obtaining a cover is particularly challenging for those who have recently recovered from COVID-19 as the company requires further screening. Even, a year ago, a 35-year-old could purchase a Rs. 1-crore term cover after a telemedical check-up. However, if he had contracted COVID-19, he would have had to undergo a battery of tests.

A Mumbai-based doctor said that a Rs. 3.5-crore cover on HDFC Life’s Click2Protect, for which he received a quote, was downsized to Rs. 1 crore. What shocked him was a WhatsApp message from the company’s employee stating, “Considering the overall profile of your – profession and medical history – rate has been revised a bit. Your sum assured has been revised to Rs. 1 crore.” According to the doctor, the message was that they were wary of COVID-19 frontliners.

HDFC Life MD & CEO Vibha Padalkar, however, stated that the revised quote had nothing to do with the profession. She remarked, “We are in the business of covering lives and we have no reason to say no to anybody unless the risk profile of the individual is not covered by the reinsurer. The reason for not giving Rs. 3.5 crore is not because of COVID, but on the grounds of financial underwriting norms.”

According to HDFC Life, where the applicant stays, their background and access to healthcare for post-COVID recovery are some of the factors evaluated currently. The situation in life insurance is similar to health where insurers are cautious in terms of accepting proposals from those who have recently recovered from COVID-19 and impose a waiting period or exclusions.

Commenting on life insurers turning cautious in underwriting cover, Sajja Praveen Chowdary, Policybazaar’s head of term life insurance, said, “Any medical condition of applicants in the recent past is looked upon by the underwriter slightly in-depth as a regular process. They might ask you for additional medical tests or physical medical tests. At times, they may postpone your cover for three or six months, in which case one has to reapply.”