Insurance for HIV/AIDS a reality soon: All you need to know

Someone once said, “You do not buy life insurance policy; you buy an education for the kids, a lifetime income for your spouse, a pension for an old person. You buy peace of mind, happiness and contentment when you buy life insurance.” And, if you go by the latest draft circular posted by the Insurance Regulatory and Development Authority (IRDA) on its website, life insurance for people with AIDS and HIV may soon become a reality.

Life insurance:

IRDA has asked insurance companies to put in place a board approved underwriting policies with respect with life insurance for people living with HIV/ AIDS. The underwriting policy is to cover clear guidelines on life insurance with people living with HIV/AIDS (PLHA). To look into all the risks from an underwriting point of view, as well as determine the eligibility criterions for eligibility for proposals in terms of medical as well as non-medical parameters. Also pre-determine the clauses for policy denied and like. In short the regulator has the insurance companies to look into various technical parameters regarding claims, proposal form, premiums and other essential structure in place before April 2014.

Health insurance:

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IRDA has also asked the insurance companies to put in place underwriting policies for health insurance offered by life insurance companies to people acquiring HIV/AIDS after the commencement of insurance policy. For instance, policies on providing lump sum amounts to policy holder after becoming HIV positive. Guidelines regarding a facility to convert the lump sum amount into an annuity for life, if the insured became HIV positive while holding the policy. You can read the full IRDA circular here.

What we think: If you see the Indian insurance industry, not many insurance companies offer health insurance cover for HIV/AIDS. Even as insurance companies start working on IRDA’s draft guidelines, there could be vast difference as far as premiums and product specifics go. Deepak Yohannan, CEO, myinsuranceclub.com, says, “I don’t think many insurance companies would jump into this. Insurance is all about financials and costing. A flat life insurance cover for HIV/Aids patience is highly unlikely, but policies with additional riders like critical illness plan and like may be launched.”

Unlike India, life insurance and health insurance is available in the West for sometime now. Hence, there is a good possibility that the India insurers will bring in products that mimic their products or in partnership with foreign insurance companies. So what we can expect in this space is dual insurance cover of life and health.

With advancement in modern medicine, the number of years an HIV/ ADIS patient lives today is much longer than 20 years ago. With increasing longevity a need for such a product is immense. But, this is just the first step. Insurance has been known to have devil in the details and it’s the finer print which matters more. An insurance industry source Firstpost spoke to said, “This looks more like a social initiative from the regulators side, more like a token initiative.”

A recent article published in United Kingdom’s Cover Magazine (read here) mentions that HIV Positive people who took HIV Life Assurance in the UK were insuring themselves for a ‘fairly low’ average sum assured. The reports also spoke about how Unusual Risks, an advisory firm, had been approached by a number of HIV charities, with concerns about the relatively short term of 10 years for HIV Life Assurance. The report mentioned that leading insurance providers were known to reduce the term on the policies they offer to only 5 years.

This without a doubt is an excellent move by the insurance regulator. Let’s hope that such a move will actually benefit the people living with HIV/AIDS, and not just add to list of complicated insurance product in the market.