Why Insurance Companies Are Insisting On A Mandatory Waiting Period For Covid Recovered Applicants

Once again Covid has started haunting the entire world, with the new Omicron variant spreading like fire. And it has not only impacted lakhs of people in India, but it even seems to have brought about a change in the life insurance policy process.

If you are amongst those who have recovered from Covid and wish to take a life insurance policy, you may have to wait for up to three months before you can avail it.

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The Mandatory Waiting Period Requirement

Life insurance companies are insisting on making the waiting period requirement applicable for coronavirus cases like other ailments.

As a standard practice to gauge the risk before selling a policy, all life and health insurance companies require people to wait for a specific period with respect to certain ailments and diseases.

And now, the insurers insist that this condition of waiting period should be applicable to Covid recovered patients applying for life insurance.

Also Read: Why A Term Plan Is The Only Life Insurance You Need

Why Is This Being Applied On Covid Recovered People?

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As per industry experts, the waiting period for individuals who have recovered from coronavirus infection is being insisted upon by insurers against the backdrop of high mortality rate related to coronavirus infection, which the entire world has witnessed over the past two years or so.

It's the reinsurers (who provide the cover for insurance policies issued by insurers) who have reportedly asked life insurance companies to bring coronavirus infection cases under the umbrella of standard waiting period norms due to the high mortality rates which have impacted the reinsurance business. The waiting period is expected to be about one to three months.

Whereas many life insurance companies are insisting on a straight mandatory three-month waiting period for Covid recovered people wanting to buy a term insurance policy.

And that's not all.

Depending on the severity of Covid infection and whether hospitalization was required or not, insurance companies are also demanding extra medical tests including chest X-rays before giving term insurance policy to those who don't have it yet.

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Trend Started After Second Wave

This trend, which seems to have started after the massive devastation caused by the second Covid wave last year, now seems to have become a full fledged policy for many insurance companies.

Covid recovered applicants wanting to buy a term plan may have to compulsorily fill a so-called Covid declaration form which, among other things, asks whether the insurance buyer was affected by the virus in the last 90 days. Further, the test results are also required, depending on the severity of the Covid infection.

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Varying Waiting Periods

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Different insurers have set different parameters for Covid recovered people to qualify for buying a term insurance plan. Some may have it for one to three months, whereas some may have it for up to six months as well.

Increased Scrutiny Despite Rise In Insurance Premiums

This increased scrutiny in term plans comes despite the rise in insurance premiums post Covid. As reinsurers have jacked up their rates to make up for higher claims due to the pandemic, term insurance premiums have reportedly risen about 10%-30% since the past few months.

Such stricter rules are also a way for reinsurers to keep their losses in check.

Also Read: Lifelong Money Lessons That COVID Lockdown Taught Us

What Next?

The arrival of stricter rules, restrictions in the form of waiting period and tests, coupled with the insurance premium hikes comes at a time when there has been a major spike in Omicron cases. But at the same time, there has been increased awareness about insurance. Hence, insurance companies would be hopeful that these changes in insurance process and prices does not dent the demand.

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