To stimulate greater uptake of health insurance, the Insurance Regulatory and Development Authority of India (IRDAI) has made a significant amendment by removing the reference to “65 years” from a pivotal clause mandating insurers to extend health coverage to policyholders until they reach 65 years of age. With this recent regulatory change, what implications will there be for senior citizens? Can this adjustment facilitate thousands of uninsured senior citizens in obtaining health coverage? And what is the ease of procuring health insurance for the first time at, say, 70 years old? ET Wealth Online has engaged with various industry stakeholders to dissect the impact of this new directive.
Fresh Health Insurance Guidelines for Senior Citizens: IRDAI’s Stance
In its latest regulations effective from April 1, 2024, the insurance overseer eliminated the age cap of 65 years for purchasing a health insurance policy, mandating insurance providers to offer health insurance products across all age demographics.
Under the previous Health Insurance Regulations of 2016, IRDAI stipulated that insurers must extend policies to individuals up to the age of 65 years. “All health insurance policies shall ordinarily provide for an entry age of at least up to 65 years,” it stated. Consequently, insurance companies were obliged to consider applications from individuals up to the age of 65. Nevertheless, there was never a prohibition on selling health insurance policies to individuals above the age of 65. Policybazaar.com had even cataloged nine policies from health insurers with maximum entry ages of 99 years and five policies with maximum entry ages of 75 years.
Health Insurance Guidelines for Senior Citizens: What’s Altered?
In practical terms, there is minimal change for senior citizens intending to purchase insurance. Despite the previous age limit, they could still procure insurance products even if they surpassed 65 years of age, albeit with a limited array of products available in the market. Now, the expectation is that more insurers may introduce products tailored specifically for senior citizens.
However, it is imperative to note that it remains non-obligatory for insurers to extend health insurance policies to senior citizens or those above 65 years of age. This decision rests entirely with the insurer and its inclination to serve this demographic.
Alteration in IRDAI Regulation: Accessibility of Health Insurance for Senior Citizens
Even with potentially more insurers offering policies to those over 65 years of age, the ease of acquiring a first insurance policy for a senior citizen at, for instance, 70 years old, warrants examination:
To procure a new health insurance policy, senior citizens are required to undergo comprehensive medical examinations. In cases of pre-existing health conditions, policy premiums are subject to increase. Insurers retain the right to decline a health insurance policy if the underwriting process identifies elevated risk based on medical examination findings.
Given that elderly individuals often contend with pre-existing ailments and are more prone to requiring frequent medical attention, insurers typically levy higher premiums to cover them. Terms and conditions for senior citizens are typically more stringent compared to their younger counterparts. Senior citizens may also encounter prolonged waiting periods before being eligible to claim treatment costs for certain medical conditions. “While a 70-year-old individual may now have the opportunity to purchase health insurance for the first time, they are likely to encounter stringent terms, exclusions, and potentially elevated premiums,” remarks Anuj Parekh, Co-founder and CEO at Bharatsure.
Balasundaram, Secretary General of the Insurance Brokers Association of India (IBAI), emphasizes, “It’s not a straightforward process for a senior citizen to simply pay the premium according to a table and obtain coverage. The acceptance of risk is at the discretion of the insurer and is contingent upon health check-ups, pre-existing conditions, premium adjustments, and additional policy stipulations and exclusions.”
Health Insurance for Senior Citizens: Premium Considerations
Now, let’s delve into the cost aspect of health insurance premiums. For a 65-year-old individual with pre-existing conditions, the premium for a Rs 5 lakh health insurance policy stands at approximately Rs 41,400, according to data furnished by SecureNow. Premiums vary depending on pre-existing conditions and the insurer.
“For a Rs 5 lakh health insurance cover, the premium may escalate to Rs 1,00,000 for a comprehensive plan,” notes Parekh.
A Rs 10 lakh health insurance cover will demand an annual premium of around Rs 63,250 for a 65-year-old with pre-existing conditions residing in a metro city. The premium for a Rs 10 lakh cover may soar to Rs 1,30,000, Parekh adds.
Senior Citizens: Anticipate Increment in Health Insurance Premiums
The insurance regulator has also truncated the maximum waiting period for pre-existing conditions to three years from four years, effective April 1, 2024. “This adjustment is anticipated to prompt most insurers to hike insurance costs for all customers by approximately 10-15%,” remarks Rupinderjit Singh, Vice President-Retail Health, ACKO. “On average, premiums rise by 10% to 20% for every five-year age bracket due to heightened morbidity risk.”
However, for senior citizens, premiums may escalate every two to three years contingent upon claims. Following continuous coverage for 60 months, an insurer cannot contest any claim on the grounds of non-disclosure or misrepresentation. Consequently, if a senior citizen frequently claims insurance for surgeries or other expenses, premiums are likely to surge sharply every few years.
“Factoring in medical inflation, estimated at around 15%, and the repercussions of these policy adjustments, overall premiums may soar by more than 30% in the upcoming year,” forecasts Parekh.
IRDAI’s New Rules for Senior Citizen Health Insurance Policies: Potential Adverse Impact
Another crucial aspect to consider is that most health insurance policies for senior citizens are custom-tailored for this demographic and are typically more expensive than policies offered to individuals below 60 years of age.
The elimination of entry age could have adverse ramifications for senior citizens, as opined by several experts. “Going forward, it might become challenging for senior citizen cohorts to procure standard policies due to the omission of entry age, potentially leaving them with fewer options in terms of senior citizen-specific policies,” remarks Shilpa Arora, Co-Founder and COO, Insurance Samadhan.
Health Insurance for Senior Citizens: Procurement Strategies
Customers with existing health issues should thoroughly evaluate coverage offerings from multiple insurers to secure optimal coverage and insurance costs. Parameters such as network coverage, room rent limits, disease sub-limits, consumable coverage, and other policy terms and conditions impacting claim disbursements should be carefully considered, adds Singh.