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Embedded Value: Life & health insurance more critical today

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The policyholders should also take care to keep other family members aware about the policy purchased, its benefits and the place where the document is stored.

The second wave of the Covid-19 pandemic is sweeping across our country. Everyday we hear about lives being lost due to shortage of oxygen or ventilator or even the medicines specifically required to treat covid positive patients.

We also hear about young lives, the bread earners of the family, losing the battle against this dreaded disease leaving behind trails of misery for their loved ones. Behind all these miseries the single most significant reason is lack of preparedness on the part of not only the state but also individuals.

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Even though instruments are available in the market to safeguard one’s financial interest in such devastating situations, people hardly bother to ever consider such products or options. The pandemic has taught a lesson that adequate insurance protection for both life and health of individuals is the most significant of the protections that one needs to provide for against the worst of the scenarios. Therefore insurance is often considered a necessity next only to bread, clothes and shelter.

Need for health insurance
Everybody desires the best health care but such care doesn’t come free. A health insurance policy comes handy in difficult situations when an emergency demands immediate hospitalisation. A mediclaim policy can take care of most of the expenses depending upon the terms and conditions of the policy. Most insurers have tie-ups with hospitals and in such a situation the patient is not required to pay any amount except for a small amount as security deposit.

The insuring public must know that policies offered in the market come with several limitations in fine print. Generally, the insurers take risk after 30 days of commencement date, they exclude cover to pre-existing disease for couple of years at the beginning of the contract and they put a condition that in respect of every claim the policyholder must himself pay to the hospital up to a certain percentage of the total allowable expenses.

Policyholders must keep in mind such conditions.
Every family must go for a health policy during and after the Covid pandemic and this must become a permanent habit. The policyholders should also take care to keep other family members aware about the policy purchased, its benefits and the place where the document is stored.

Need for life insurance
On the other hand, a life insurance policy must be purchased well in time and one must pay premium when due. Besides, the policyholder must develop the habit of reviewing his existing insurance portfolio from time to time and not hesitate to extend risk cover through new policies or through riders. Initially the focus must be on maximum risk cover at minimum cost. Savings through life insurance is a secondary issue. One must also take care to ensure that nomination under each policy is updated and if a policy is assigned for loan, etc., such information must be available with the family.

Claims from insurers
Filing a health insurance claim begins with the immediate intimation to the insurer’s office about hospitalisation of the insured person. The third-party administrators who are generally represented by an employee at hospitals take over the issue and ensure that the hospital provides services without asking the family members to pay the fees instantly.

Good hospitals have tie-ups with major insurers and ensure smooth settlement of bills through the insurance cover of the patient. Some claimants may, however, face complications but that could be sorted out at the insurer’s office. Nevertheless, health insurance protects them from financial crises. Covid patients are fully covered by any standard health insurance policy. For this pandemic, separate policy is not required.

Death of the policyholder due to Covid is covered under any life insurance policy. The claim settlement procedure for cases where cause of death is Covid is similar to processing of claims arising due to death by natural causes.

The writer is former MD & CEO, SUD Life

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