One-two move from IRDAI now securing senior citizens

Two days after IRDAI notification on lowering PED (pre-existing disease) waiting period to three years and moratorium to five, the insurance regulator announced yet another measure, this time for senior citizens.

Insurers should now ensure that they offer health insurance products to all age groups. This improves accessibility of policyholders, especially senior citizens, without worrying about entry age parameters across insurers.

To be clear, entering health insurance at a higher age was not restricted earlier. However, there was certainly a cut-off which each insurer could emphasise, starting from the age of 65. In a notification dating back to 2017, for instance, IRDAI mentions that ‘all health insurance policies shall ordinarily provide for an entry age of at least up to 65 years’. With the removal of this limitation, all policies must be offered to everyone irrespective of age of entry.

How will it impact?

Amit Chhabra, Chief Business Officer - Health Insurance, Policybazaar.com, feels the biggest impact will be lifting of the myth that senior citizens cannot access health insurance. Earlier, with fewer number of insurers offering health insurance for policyholders above a certain age and with limited application, senior citizens faced restricted options for health insurance. This notification allows policyholders to shop for health insurance just as any other younger policyholder would do so on aggregators apps, agents or direct selling.

He also points out that the availability of more options allows for a higher level of customisation for senior citizens, which was earlier widely available to only younger policyholders. Since there are no age restrictions, the same out-patient add on, PED reduction clause, wellness benefits, room rent limits and any other feature/rider have to be made available to all ages. This allows far greater elbow room to seniors who had to manoeuvre only a few features in the few policies.

The notification also mentions that insurers may design policies specifically for senior citizens, students, maternity, or any other group. Since insurance works on the principle of shared risks, there is scope for addressing risk objectives of each group individually as well.

Other factors

While insurers have to offer health insurance to all ages, underwriting of the policy is still insurer’s prerogative. Policyholders must realise that, pricing, initial screening and final issuance will still be controlled by the issuer. With regard to senior citizens, pricing of the policy will be higher considering the higher risks. But as Amit Chhabra of Policybazaar.com explains, unless there are extreme cases of PEDs including chronic kidney diseases or critical chronic conditions flaring up in the past, polices are still issued to seniors even in the current regime.

In a recent notification, PED waiting time (time before a pre-existing disease cannot be claimed) has been reduced from four to three years and moratorium period reduced from eight to five years. Specifically for senior citizens who have a higher likelihood of PEDs including diabetes or hypertension, the lowering of wait times and the current availability to all ages should be highly beneficial.

What can you do?

A senior policyholder can now access most of the features in a health insurance compared to earlier. This should allow for designing a policy that balances cost and coverage. There are higher and lower cost options available even currently according to policybazaar.com. Under Star Health’s senior citizen Red Carpet plan a 70 year old can purchase health insurance plan for ₹25,000 per year which provides a ₹10 lakh cover with a 30 per cent co-pay, room rent limit of ₹6,000.

But for ₹43,000 per year under Aditya Birla’s Activ One policy a ₹10 lakh cover (with additional ₹10 lakh from day one), no co-pay, unlimited restoration of cover, and no limit on room rent can be purchased.

Depending on cost vs coverage preference, seniors’ ability to exercise such options in various other policies should also open up, once the notifications are implemented by the insurers.

Considering the rising cost of medical care, the lack of social safety net and increasing incidence of chronic diseases, health insurance is a necessity. With regulators providing further impetus by removing age limits and reducing PED wait times, senior citizens should get an appropriate health cover which earlier may have been out of reach.

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