HIV/AIDS patients will have to pay higher premium for life insurance

Persons suffering from HIV/AIDS or other pre-existing illness will have to pay higher premium for life insurance, regulator IRDA said today.

Insurance Regulatory and Development Authority (IRDA) Chairman T S Vijayan said insurance companies will provide life cover to persons with pre-existing illness, but the pricing will be based on commercial considerations.

“The whole idea is the person may be having a disease, once the policy has started even if the person is having disease, he is not excluded. Obvious thing is pricing has to be different. That is the commercial decision left to the industry,” he told reporters after a Ficci event in New Delhi.

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He said a few insurers have already introduced cover for HIV/AIDS infected patients. “I am sure more companies will bring policies,” Vijayan said. IRDA had in October come out with a draft circular, asking all insurers to provide life-insurance cover to HIV/AIDS patients.

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The circular on policies for people with HIV/AIDS is likely come into effect from April 2014 and insurers would be required to put in place procedures for underwriting and claim settlement, and proposal form before that. The circular also provides for health insurance products offered by life insurers for those who are HIV negative at inception of the policy and acquire HIV/AIDS after commencement of insurance policy.

With respect to such persons who are HIV negative at date of commencement of the contract and subsequently found to be HIV positive during the term of the policy, the circular states that the insurers should not reject/deny any claim on such grounds and in all such cases, the underwriting guidelines and claims settlement guidelines applicable at the time of commencement should be applicable.

Insurers have expressed apprehension that long-term health products may not be viable for this category of persons for reasons like limited data available on health care utilisation and co-morbidities/co-infections associated with HIV/AIDS. Some insurers are of the view that there should be specific provisions in the guidelines for mandatory disclosure of the diagnosis of HIV/AIDS by the proposed insured so that appropriate actions may be taken by the insurer which may include suggesting the applicable product and loading on premium or denial of claim where material information is not disclosed appropriately in the proposal form, etc.

On banks acting as brokers for insurance companies, Vijayan said RBI has come out with draft guidelines and has invited comments from banks for the same.

“The date for giving suggestions on the draft guideline is end of December. Then we will see what is the moving forward,” he said.

On differential pricing for group and individual life insurance policies, Vijayan said there is always an advantage in costing in case of group policies.

“To that extent there will be always discount on group pricing over individual pricing. What we are saying is we should be reasonable,” Vijayan added.

PTI