“The proposal is at a discussion stage at the actuarial department. We will soon bring out a discussion paper on this,” said a senior Irda official. This proposal will first be presented as a paper to life insurers for their feedback and then, detailed guidelines would be formulated.
At present, disability insurance is provided under personal accident policies by general insurance companies. Here, the policy provides for income replacement if the policyholder gets physically injured in any accident leading to loss of income for the family. Disability is also covered by life insurance companies, wherein a cover is provided for accidental disability. These products are offered both, as a policy and as a rider with an insurance plan. If anything happens to the insured during the policy tenure, the insurance company pays him/her a lump-sum amount. However, this does not provide any protection for disabilities existing from one's birth or early childhood.
Insurance sector officials said that there, the regulator would clearly define what is disability, the types of disability-permanent or ongoing. The various ailments are also expected to be classified either as static and permanent, which would include polio and physical disability like loss of sight at birth, loss of hand/leg at birth among others. Other types of ongoing ailments like severe Hepatitis B, cancer of the last stages and severe damage to the lungs or heart would be put into a separate category.
“While permanent and static disability is expected to be included as the category that would be covered by life insurance, progressive and critical stages of ailments are likely to be excluded from coverage. This is because such ailments are very risky to be covered, from an insurance perspective,” said a senior life insurance official.
Officials close to this development said that at a future stage, when there is adequate data and research on these ailments, such patients could be provided life insurance cover, albeit at a higher premium.
Not all types of cancer are excluded from life insurance coverage. While patients in the last stages of such life-threatening diseases are excluded from life insurance coverage, others at an early stage are not denied a cover. These patients usually pay 30-40 per cent higher premium than regular policyholders, due to the higher risk involved in their coverage.