Why diabetics get life cover, but not health insurance?

Have you ever wondered why people with diabetes are able to get term life insurance but not health insurance?

An anguished post on the Apnapaisa website says: “I am 40 years old and a diabetic but have no other health issues. I was recently able to get a 20-year term insurance policy for Rs 1 crore, though at a higher than normal premium. But all my efforts at getting a health insurance policy have been unsuccessful.”

This post (and similar ones) is both heartening and depressing. It is heartening because it clearly demonstrates a high level of insurance consciousness, which is what all personal finance professionals have been struggling to promote in recent years. It is depressing because it lays bare a very serious problem to which no thought seems to have been given so far. A little more than five per cent of population suffers from diabetes. In fact, India can definitely bag the dubious honour of being the “diabetes capital of the world”. But there does not seem to be any “systemic” solution in sight on availability of health insurance for this vast number.

So, why are diabetics able to get term insurance (even if at a higher cost) but not health insurance? It is not too difficult to understand.

Term insurance covers the risk of dying and pays a lump sum to the family of the insured person if he dies during the policy tenure, which typically will be till the age of 65 or a maximum of 70 years. Medical science has progressed sufficiently that patients suffering from diabetes and its many complications (such as heart disease, stroke and eye problems, etc) are not likely to die before the policy tenure, though the risk is higher than people with normal health. Hence, it is possible for the insurance company to cover the risk, albeit at a higher premium.

Ironically, the same advancement in medical sciences is responsible for the health insurance company’s reluctance to provide policies to such persons. The data of people having to be hospitalised (called morbidity data) in the future are starkly different for people who are diabetic and those who are not. The chances that people who are diabetic will need to be hospitalised repeatedly in the future and, therefore, incur heavy hospitalisation expenses repeatedly are fairly high.

Therefore, the health insurance company is giving a long-term policy when it first agrees to provide health insurance to you. This explains why insurance companies are reluctant to issue health insurance policies to diabetics. While companies have a valid reason for refusing to issue a policy for the first time to diabetics, it is important to have a systemic solution. There are a few practical solutions that you can use.

The four nationalised insurance companies have health insurance policies that cover diseases arising from diabetes after a waiting period, though you need to pay an additional premium. In spite of such product, in actual practice, the local offices of these companies refuse to accept such proposals by the simple expedient of returning the proposal papers without encashing your premium cheque. This way that application does not show on their records as refused. You can use the online application process and make full and complete disclosure and also make the payment online. This will ensure that the company provides you an official reason if they wish to refuse your proposal.

The only company that does accept diabetics if they are otherwise in good health and still young is Max Bupa. Please make sure you make full disclosure and pay the additional premium if the proposal is otherwise acceptable to them. This is much better then the reluctant policy that you will need to wrangle from the nationalised insurance companies.

The writer is CEO, Apnapaisa.com