Seniors must strike a balance between premium and co-pay
Too low a premium could mean high co-pay, which would pinch at the time of claim settlement
The Insurance Regulatory and Development Authority of India (Irdai) has introduced the new Insurance Products Regulations 2024, mandating insurers to offer health insurance plans to all age groups. This replaces the previous requirement that health policies must offer an entry age of at least 65 years.
Implications for the elderly
The 2016 health insurance guidelines mentioned that companies offering health insurance must provide entry into policies at least up to the age of 65. This cap has now been removed. “Irdai’s announcement is a significant step towards greater inclusivity in health insurance,” says Rakesh Jain, chief executive officer, Reliance General Insurance.
Rejecting proposals citing age will not be possible. “Senior citizens who are healthy will be able to gain access to health insurance,” says Amit Bhandari, chief technical officer, Magma HDI General Insurance.
Senior citizens had limited options until now. “The removal of age-related cap will provide them with multiple options across insurers as they will be able to access all the existing health insurance plans,” says Ashish Yadav, head of products and operations, Manipalcigna Health Insurance. He says seniors will gain access to products currently aimed at a younger demographic, which offer comprehensive features.
Will senior citizens get health coverage more easily? That remains to be seen. “Insurers retain complete freedom to price and underwrite products as they choose to,” says Kapil Mehta, cofounder,
Product pricing may evolve Expect greater innovation in products targeting seniors. “Insurers will likely respond by designing specialised products tailored to the needs of this demographic, including coverage for pre-existing conditions,” says Jain.
Mehta says around 50-60 per cent of plans with agerelated caps will have to be modified.
Their pricing may also change. “The existing products were developed assuming that no new customers over the age of 65 would be acquired. However, if older customers have to be included, insurers may need to reassess their strategies to determine if a price increase is necessary or if they can maintain attractive pricing by targeting larger volumes,” says Yadav.
Obstacles senior citizens face
Many seniors have pre-existing diseases (PEDS). “They suffer from chronic conditions such as hypertension, diabetes, high cholesterol, arthritis, etc. This results in loading, which increases the premium. It also leads to exclusions,” says Mehta. Exclusion refers to certain ailments being permanently omitted from coverage, or they are covered after a waiting period. Sometimes, proposals are outrightly rejected.
Affordability is a significant challenge. “With age, the likelihood of hospitalisation increases, leading to higher premiums,” says Siddharth Singhal, business head-health insurance, Policybazaar.com.
Product options remain limited. While some insurers have increased the entry age in their flagship products, others offer customised policies for seniors with relaxed underwriting norms.
Avoiding denial of coverage
Seniors with routine ailments may select one of the plans available to them. “Seniors with severe conditions might consider a top-up cover with a high deductible, which insurers are likely to issue,” says Mehta. Specialised plans are available for those with severe PEDS, such as cardiac issues or type I diabetes, but the options are severely limited.
Balance affordability and coverage
Seniors should aim for optimal balance between coverage and affordability. “Opt for plans with shorter waiting periods for PEDS,” says Bhandari. Now, by paying a higher premium, it is possible to reduce the waiting period for ailments like hypertension and diabetes to one day.
Also, favour plans that do not have sub-limits.
Co-payment is a cost-sharing arrangement where the insured pays a specified percentage of the bill, with the insurer covering the remainder. Previously, most senior citizens’ plans came with co-pay, but that is no longer the case.
“Nowadays many plans for seniors do not have co-pay, or it can be reduced by paying a higher premium,” says Singhal. Strike a balance between the premium you can afford and the level of co-pay.
Choose plans with the noclaim bonus feature, which allow the bonus to accumulate over successive years and help counter medical inflation. Compare both features and premiums online. “If the premium is very low, the plan could have limitations,” says Singhal.
Buy an adequate sum insured. Singhal recommends at least a ~10 lakh base plan per person combined with a top-up of ~1 crore.
Managing costs
Over the past few years, modular policies have been introduced that allow customers to remove unnecessary features and lower premiums. Paying premiums quarterly or monthly, instead of annually, can make their burden more manageable (but be wary of missing a payment).
Given the high medical inflation and premium costs for seniors, continuously increasing the sum insured may not be feasible, so create a health corpus. “On average, save 50 per cent of your post-tax salary every working year and keep working till the age of at least 60, even if it is in a lower-stress role,” says Avinash Luthria, a Sebi registered investment advisor (RIA) and founder, Fiduciaries.