Irdai allows life insurers to sell short term benefit-based Covid policies

Non-life insurers can sell both, benefit-based and indemnity-based short-term health covers

In a move aimed at providing insurance protection to a vast majority of people in the ongoing pandemic, the insurance regulator has allowed all insures – life and non-life – to offer short term health insurance policies specifically for covid-19.

According to the regulator, short-term health policy means any health insurance contract that has been issued for a policy term of less than 12 months. If a policy term is fixed at 12 months then it will not be short-term.

According to the norms, life insurers are generally not permitted to underwrite indemnity-based health insurance policies. Hence, the regulator has allowed them to offer only benefit-based short term specific Covid health plans. 

As life companies have a huge distribution network, life companies have been asked to sell short term health policies specific only to covid so that a large number people get health insurance protection during these uncertain times.  Interestingly, the regulator has formed a committee which is looking intothe feasibility of allowing life companies to sell indemnity based health policies as well.

The non-life insurers, on the other hand, can offer both benefit based and indemnity based short term health products.

The regulator has said, short term policies can be issued for a minimum term of three months to a maximum of term of eleven months. In between three months and eleven months, the policy term shall be in multiples of completed months. A policy for term for less than three months is not permitted. And, short term covid health policies can be offered as individual or group products.

While no separate add ons are permitted, optional covers that enhance the health insurance coverage are permitted to be offered for the same policy duration.

Insurers are advised to devise inclusive short term health insurance products where waiting periods are part of the product, and such waiting period shall not exceed fifteen days, the regulator has said.

These guidelines will remain valid till March 31,2021 until further orders by the regulator.