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Coronavirus Term Insurance

A majority of life insurance companies in India treat death due to Covid-19 same as a general death. Hence, claim for such coronavirus term insurance policy options would be admissible in case the insured individual was diagnosed with COVID 19 after the issuance of the policy.

In case the medical practitioner certifies that the insured’s death has occurred because of COVID-19, death benefits for the term insurance scheme plan covering him/her will be payable after investigation. In some instances, a medical team selected by the insurer also may evaluate the authenticity of the claim in such scenarios.   As of now, there are no special terms and conditions for term insurance policy schemes when it comes to death due to COVID-19, and it is treated as any other type of death.

What is Coronavirus?

Coronavirus disease 2019 (COVID-19) is defined as an illness that is caused by a novel coronavirus. On March 11, 2020, the WHO declared COVID-19 to be a global pandemic. Covid-19 has impacted millions across the world, including several thousand in India and still counting. This virus is extremely contagious and displays symptoms like fever, sore throat, respiratory problems, and impaired kidney, and even failure of multiple organs in severe scenarios.

The Indian government has imposed several mobility restrictions across the nation to limit the spread of this infectious disease.

Grace period for life insurance policy extended by IRDAI due to COVID 19

The COVID-19 pandemic and the lockdown enforced in India to prevent its spread has adversely impacted the financial situations of several people across the country. Paying their life insurance policy scheme premium amount additionally had become a burden for a few people. Hence, to provide relief to these policyholders, the Insurance Regulatory and Development Authority of India [IRDAI] initially announced an additional grace period of 30 days for life insurance policy schemes whose premium fell due in March and April. This grace period has been further extended to up to May 31 for all life insurance policies whose premium was due in March. 

What are Life insurance companies offering amidst the COVID 19 outbreak?

Life insurance providers are offering the following amidst the Covid-19 outbreak:

  • IndiaFirst

    The existing life insurance scheme plan options offered by IndiaFirst Life Insurance shall cover death occurring due to COVID-19. All life insurance plans, including term insurance policy schemes that have been issued by the company and are valid until the event of unfortunate death due to Covid-19 illness, shall apply for a death benefits claim.

  • Aditya Birla Sun Life Insurance

    The death claims occurring due to COVID-19 are settled based on hospital records for all policy schemes where hospitalization is covered. This company shall also provide a settlement for medical expenses incurred for treating coronavirus.

  • Max Life Insurance

    As there have been no exclusions for death benefits arising out of epidemics mentioned in policy documents, all death claims arising out of coronavirus shall be honoured by this company.

  • Life Insurance Corporation of India

    Death claims coming up due to coronavirus COVID 19 infection are treated on par with other causes of death by LIC. The unfortunate demise of any LIC term plan scheme policyholder would be processed according to the terms and conditions of the relevant plan. The nominee/dependent of the policyholder would be required to submit essential documents like the death claim intimation, death certificate, and a copy of the policy schedule at their nearest LIC branch (if it is operational) to make a claim. In case the branch is non-operational due to COVID-19 advisory, policyholders may email the death claim intimation, death certificate, and copy of policy schedule to the relevant nodal person. 

Why would it be a good idea to invest in life insurance amidst the coronavirus outbreak?

It has become especially vital for people to invest in life insurance policy schemes amidst the COVID-19 pandemic due to the high risk of infection of this ailment, and non-availability of a vaccine. Moreover,  while on a regular day, people would be required to submit multiple documents and medical test result to invest in a comprehensive term insurance policy option, many insurance companies are now waiving off the need of medical tests and issuing life and term insurance scheme policies after just short video interactions. 

Investing in life insurance cover is vital for any person having dependants at home, and buying such policy schemes can even turn out to be cheaper for them as they shall be investing in it directly from the company website, and hence would not be required to pay any type of commission costs. Amidst the pandemic, people can easily compare policies for life insurance online and ultimately invest in a plan that suits their requirements easily within a few clicks.

Typically most people buy a life insurance plan through an agent or by directly visiting the local branch of an insurance provider. In such cases, people are usually asked to submit several documents and relevant medical reports to be considered eligible for a life insurance policy scheme. These hassles can, however, be avoided if people opt to invest in a life insurance policy option during the lockdown enforced across the country due to Covid-19. A great number of insurers are nowadays directly selling products through their sales staff using video and telephonic interactions. At the same time, the physical fitness and health of the policy buyers are being ascertained simply with the help of a few salespersons. Apart from avoiding submitting various medical documents, now the policy buyers also do not have to waste much time in filling policy forms with an intermediary. 

Moreover, due to the uncertainty prevailing in the business environment currently and the lack of clarity about when the lockdown would end, many insurance companies are selling products with minimum friction. Hence, it is unlikely that they would refuse to sell life insurance products to any client due to the fear of potential patrons dropping out. In comparison to the pre-COVID-19 era, insurance companies these days are likely to ask lesser questions to the policy buyers as their only motive would be to meet their requirements. Moreover, the overall life insurance scheme policy purchase process has become much faster due to digitalization, and people's coverage may start from the very day they have had a video chat with an insurance company salesperson and buy a plan.

Factors to remember when purchasing a new life insurance policy during the Coronavirus Pandemic

If people are not already covered by any life insurance policy scheme till date and want to protect their loved ones from any financial risk due to the risk of death of this deadly disease, they must keep a few things in mind when planning to invest in a new term life insurance scheme options.  The policy premiums of life insurance policy options, including that of term plans, are determined carefully after examining the current health condition of the policy buyer and their past medical history. If a person is not infected with Covid-19 at the time of policy purchase, their family will have a chance to benefit from death if they are infected with the disease later on and meet an unfortunate demise.

However, in case people have any underlying medical conditions or have been infected by Covid-19, the insurance company would have the right to either deny or hold their application. Moreover, due to the global scale of Covid-19 with no cure available at the moment, the policy premiums might be a bit on an expensive side.  It is recommended that the policy buyers read documents of their insurance policy scheme diligently to get an adequate understanding of the diverse situations that are excluded from lover coverage as every insurance provider may have distinguished terms and conditions.

How to Buy Life Insurance during the Coronavirus Pandemic? 

Due to the Coronavirus outbreak, people are advised to maintain a distance from one another. The best way to invest in an insurance policy scheme would be online. Here are some of the steps that people can follow when planning to invest in a life insurance policy option amidst the coronavirus pandemic: 

  • People should firstly browse diverse insurance policy scheme options offered by varied insurance providers online
  • Then they must compare policies offered by various insurers and shortlist the ones that perfectly fit their insurance requirements

  • Using an online policy calculator, the people must calculate the premium sums for the various policies shortlisted by them

  • After making the required premium and policy comparison, they would be able to identify the insurance scheme option that both fits their requirements and comes under their budget

  • After identifying the perfect life insurance policy scheme to invest in, people must visit the insurance company's website offering the relevant plan

  • Once they reach the website, they would be required to select the plan they desire to buy

  • After selecting the desired plan, they have to enter a few details so that the website policy calculator can calculate their premium amount

  • They must proceed to buy the policy once they see the premium amount for the desired life cover on the screen

  • After that, they have to select the premium paying option and the payment method

  • Finally, they have to enter the details and make the payment

The steps mentioned above are some of the most common steps involved in insurance policy purchases. However, the specific steps involved in buying various life insurance policy schemes online would depend on the insurer's website. Hence, after people opt to compare online policies and identify the perfect insurance option to invest in, they should take some time to browse the insurer's website to understand its navigation system perfectly.  In addition to maintaining the social distancing guidelines that are vital amidst the pandemic outbreak, there are several other advantages that people can avail by opting to buy their life insurance policy options online, such as: 

  • They get multiple options to make their choice from

  • They can easily compare plan features online and select the best plan as per their need

  • No agent or advisor influence

Impact of COVID 19 on the life insurance industry 

Organizations across sectors are nowadays struggling to find ways and methods to cut costs and counter the impact of coronavirus (COVID-19). Life insurance companies are specifically planning to cut down on the cost by reducing branch presence.  In fact, by mid FY22, around 6-8% of the 11,600 life insurance company branches can be cut down to save money, especially the branches that are in large cities.  

Due to the lockdown enforced to prevent the spread of the pandemic, life insurance policy schemes are anyway sold online. Hence, the idea is to leverage this fact and turn it into strength than investing in branch real estate in the future.

At the moment, bank branches and agents are the two of the largest distribution channels for discerning life insurance companies. However, ever since a nationwide lockdown was announced in India on March 25th to curb the spread of Covid-19, all life insurers have been forced to move their operations online. These insurance companies are now selling their products through their websites, third-party online portals, and even through video calls with customers.

Life insurance companies of the country witnessed a 32.2% year-on-year (YoY) decrease in the new premium collection in March 2020 between the Covid-19 pandemic that has to lead to a lockdown across the country. Similarly, the premium collections for the first-year reduced 32.6 YoY for April 2020.

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Written By: Paisawiki - Updated: 09 September 2020
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