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Insurance or no insurance for COVID-19?

By Tensing Rodrigues

Should you cover yourself against COVID-19 or not ? Does it sound like, should you take a vaccine for COVID-19 or not? There could be some difference. Even if you take a COVID-19 Insurance Plan, you may still get the infection. The insurance cover will only foot your medical bills in case you are infected. But the vaccine may … well we do not know still. The taste of the pudding lies in eating; said the old. Let us ‘taste’ a few COVID-19 Insurance Plans.

  The first plan we look at is the ETMONEY COVID-19 Insurance Plan. ETMONEY is not an insurer. It is a vendor selling insurance plans from ICICI Lombard. The plan is available for anyone in the age group 18-75. And what it claims as its major USP, you pay the same premium for everyone, no matter what your age is. Well, that makes it a lottery rather than an Insurance Plan and you can see this through each of its features.

  For a true insurance cover, the premium would depend on your risk of contracting COVID-19. In other words, it depends on the probability that the insurer will have to pay a claim. Since this probability is higher in case of persons with a higher age, the premium would have increased with age. This is true not only of health insurance but of life insurance a

s well.

  One of the primary conditions of a true health insurance policy is that you need to be hospitalized for a minimum of 24 hours to claim the insured amount. However, with the ETMONEY COVID-19 Insurance Plan, you get Rs 25,000 immediately upon testing positive for COVID-19. There is no need for hospitalization and there is no need to furnish bills of medical expenses. You can spend the amount on just anything. All that you need to do is to pay a premium Rs 159 and buy the plan. That is pay Rs 159 and buy the lottery if your number comes that is if you test positive for COVID-19, you get Rs 25,000.

  It is a group insurance plan, not an individual or a family floater plan. Group insurance plans provide coverage to a group of members, usually comprised of company employees or members of an organization. These are purchased by companies and organizations, and then offered to its employees or members. Here ETMONEY has purchased the plan and is now offering it what it calls ‘ETMONEY users’. That tweak does not matter to the insured.

   The policy has a term of one year from the date of purchase. The promotion page says, “There will always be the fear of re-emergence, relapse or silent carrier. COVID-19 Insurance plan is valid for one year from the date of purchase. So even if there is any possibility of a second wave towards the end of 2020 or early 2021, it will be covered by the policy.”

   It means just that, you are covered for one year from the date of purchase, not just the current epidemic. But it does not mean that if you are tested positive for COVID-19  any number of times during one year you will get Rs 25,000 every time.

   Since it is a plain lottery based on testing positive for COVID-19, only condition is that you should not have been already tested positive. Therefore it has a cooling period of 14 days, viz. you cannot make a claim within 14 days from the date of purchase. Both the conditions mean the same thing: that the policy cannot be purchased by a person who is already infected by COVID-19. That makes perfect sense. ETMONEY assumes that if you are not already infected by COVID-19 then your chance of contracting the disease is given by a certain number. This number is given by the total confirmed cases of COVID-19 in India up to the date when the policy was offered for sale, divided by the population of India on that date.

   As on May 22, 2020, the number was 0.000086. That is 86 persons out of 10 ten lakhs are likely to test positive. That is one out of 11,627 persons buying the policy are likely to win the lottery, that is get Rs 25,000.

  Let us look at it from the point of view of the insurer. For every Rs 18,48,693 (159x 11,627) that the insurer collects from the sale of the policies, it will pay out Rs 25,000 as claim. The rest is insurer’s operational and marketing expenses and profit.

*The author is an investment consultant. Readers can send their comments and queries to tenala@gmail.com

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