The Insurance Regulatory and Development Authority of India brought in the Insurance Regulatory and Development Authority of India (Insurance Products) Regulations, 2024, on April 1. Under the new norms, insurance companies cannot refuse to sell health cover to senior citizens above the age of 65 years.
In a notification issued in 2016, the insurance regulatory body established an entry age of ‘up to 65 years’ for insurance companies to offer health insurance coverage. Although there was no explicit restriction on selling policies to individuals above 65, only a few insurers actually provided health policies to first-time buyers in that age bracket.
New norms: What has changed for the senior citizens
It is to be noted that there was never any bar to sell policies to those above 65. IRDAI had previously set an entry age of ‘at least up to 65 years’ for insurance companies to provide health insurance covers. But only a handful insurers sold health policies to first-time buyers beyond 65 years.
Now, IRDAI has asked insurance companies to offer health insurance products to all age groups, including senior citizens, and offer coverage for all types of existing medical conditions.
The revised guidelines include a reduction in waiting periods, now capped at a maximum of three years, down from the previous four years.
This is in line with the ruling BJP’s election manifesto that said “everyone over the age of 70 years” would be brought under the government’s Ayushman Bharat health insurance scheme.
Health insuarnce for senior citizens
India is a predominantly young country currently, but the share of the population above the age of 60 is projected to reach 20% by 2050. But insurance companies at present do not have many policies for the senior citizens.
Experts and industry voices have said the majority of insurers are expected to develop health insurance policies specifically tailored for senior citizens, in contrast to the standard health covers typically available to those under 60 years of age. These policies are anticipated to be considerably more costly than the standard covers provided by insurance companies at present.
Will the premiums go up?
Health insurance can be extremely costly for a first-time purchaser above the age of 60. For example, a health insurance policy tailored for senior citizens offering coverage of Rs 10 lakh for a 65-year-old person will require an annual premium of Rs 50,000 to Rs 55,000, varying based on the specific terms and conditions.
Although the premium remains fixed throughout the policy term, the insurer reserves the right to raise the premium during renewal if there has been a claim in the previous policy years.
Besides, IRDAI has also reduced the maximum waiting period for pre-existing conditions to three years from four years, starting from April 1, 2024.
Speaking about the reduced maximum waiting period, Rupinderjit Singh, Vice President-Retail Health, ACKO, said: “This move will see most insurers increasing the cost of insurance to all customers in the range of 10-15%. On average, premiums increase by about 10% to 20% for every five-year age bracket in line with an increase in morbidity risk.”
“Following the new rules, the premium amount will be relatively expensive as the insurance companies could introduce targeted products for senior citizens. The premium for senior citizens will be increased due to the nature of the products designed by the insurance companies,” Shilpa Arora, Co-Founder and COO, Insurance Samadhan told the Economic Times.
“On 1 April 2024 the IRDAI Insurance Products Regulations, 2024, have come into effect which brings in a new wave of relief for senior citizens. Schedule III of the Regulations enumerates the specifications of the product design and development cycle of health insurances products wherein it is specifically mentioned that insurers shall offer health insurance products to all age groups and may design products specifically for senior citizens, irrespective of existing medical conditions. The waiting period for pre-existing diseases has been reduced to a period of 3 (three) years from the existing 4 (four) years, by these Regulations. Due to such changes in IRDAI Insurance Products Regulations, it is expected that there may be a hike of 10-15% in the health insurance premiums,” said Amit Kumar Nag, Partner, AQUILAW.
“The anticipated 10-15% increase in health insurance premiums for senior citizens, stemming from alterations in health insurance regulations, raises multifaceted concerns. Primarily, the financial ramifications loom large, as this hike could significantly burden the already constrained budgets of elderly policyholders. Affordability of comprehensive healthcare coverage becomes a pressing issue, potentially forcing seniors to reassess their insurance options or even forego essential medical services due to financial constraints,” said Deepika Kumar, Partner at King Stubb & Kasiva.
In general, premiums tend to increase by 15-20% every five years, unless there are several claims in the preceding policy years. However, for individuals aged 60 and above, premiums may rise every two to three years based on claims and cover add-ons, experts added.
Additionally, the insurer will consider specific surgeries, medical tests, and other healthcare needs of senior citizens to determine the renewal premium.
Points senior citizens should note
> Before buying a health cover, senior citizens should inquire about the waiting periods and understand how they will impact the coverage of pre-existing conditions.
> When choosing a policy, it’s important for senior citizens should consider the network coverage, the limit on room rent, sub-limits for diseases, coverage for consumables, and other terms and conditions of the policy that could limit payouts when making a claim.
“Individuals seeking health insurance post-retirement may find it advantageous to continue with employer-offered health insurance if possible, where insurers can provide more competitive premium rates and favourable policy conditions,” Anuj Parekh, Co-founder and CEO, Bharatsure, said.