Medicines for coronavirus-led diseases have been authorised by the Indian drug regulator Drug Controller General of India. The new medicines are more effective on mild and moderate conditions of COVID-19 related diseases. However, for severe cases of COVID-19, we are yet to get a medicine with high efficacy level. Till the time an effective cure comes, coronavirus remains a potent threat. Government facilities are getting overwhelmed with score of patients and cost of private treatment has gone up significantly. Unless you have a good insurance the disease is likely to dig a big hole in your finances. To address the situation and to come up with a solution, the insurance regulator IRDA released new guidelines on June 23 which allow both life and health insurers to offer short-term special plans for COVID-19 coverage.

What is special in COVID-19 health plans?

Although COVID-19-related illnesses are covered under all standard comprehensive health insurance policies, rising cost of disposables and consumables has made the cost in private hospitals really exorbitant. The COVID-19 plans are expected to provide that much-needed support.

"These policies address the high cost of PPEs that could burn a hole in your pocket because PPE kits and other consumables are not covered under most health insurance products and PPE kits have become a significant portion of the hospital bill. Coverage of PPE, gloves, masks and other similar expenses will provide comprehensive treatment to policyholders for COVID-19," says Amit Chhabra, Head-Health Insurance, PolicyBazaar.com.

These are short-term plans with terms ranging from three months to 11 months which will not offer renewability or portability. These plans will have a maximum waiting period of 15 days and will be offered till March 31, 2021.

There are two types of COVID-19 special plans -- one is based on indemnity that pays the actual amount spent on the disease and another is benefit-based plan that will pay the entire lumpsum amount on the diagnosis of COVID-19 and subsequent requirement of hospitalisation. Health insurance companies can offer both types of plans while life insurance companies will offer only benefit-based plans.

Benefit-based plans

The benefit-based plans pay the lumpsum amount on occurrence of the covered disease with specific conditions. "This is not an indemnity plan which means that the payout on diagnosis of the disease does not depend on actual expenses incurred. It simply pays the insured the entire sum assured irrespective of the hospitalisation expenses," says Naval Goel, CEO & Founder of PolicyX.com.

In the benefit-based COVID-19 short-term plans, the policyholder will receive a lumpsum benefit equal to 100 per cent of the sum insured if he tests positive for COVID-19 and requires hospitalisation for a minimum period of 72 hours.

Indemnity-based plans

Indemnity-based policy pays back the actual expenses incurred on the treatment of the covered diseases under specific conditions. IRDA has allowed only health insurers to offer this policy. It will come in two variants -- family floater and individual. The policyholder will get cashless or reimbursement-based payment for hospitalisation expenses incurred for the treatment of COVID-19 on positive diagnosis for the infection from a government-approved diagnostic centre.

"It will cover room, boarding, and nursing expenses. Surgeons, anaesthetists, consultants, specialist fees, including consultation through telemedicine, will be covered. Other costs such as oxygen, operation theatre charges, surgical appliances, drugs and medicines, PPE kits, and gloves, among others will be admissible if hospitalised for a minimum of 24 hours. Intensive care unit and intensive cardiac care unit expenses will be covered too," says Chhabra of PolicyBazaar.com.

The policy will also cover the cost of treatment at home provided the medical practitioner advises home treatment and there is a continuous active line of treatment, which requires monitoring of health status by a medical practitioner through the duration of the home care treatment.

"Ayush treatment, pre-hospitalisation expenses incurred 15 days before the date of hospitalisation and post-hospitalisation expenses incurred 30 days after shall be covered. The policy comes with an optional hospital daily cash cover in which the insurer will pay up to 0.5 per cent of the sum insured for every 24 hours of hospitalisation. The benefit will be payable for up to 15 days during a policy period," says Chhabra.

Avoid going for minimum premium

Being a standard product across all insurers, each of the insurance companies will be allowed to price the product as per their individual underwriting terms and conditions. It means the price of the product will vary from one insurer to another. Should you take a call based on premium of the settlement ratio of the health insurer?

"One of the major criteria for deciding the policy premium will be claims ratios as the actuarial team of each of the insurers will be making different assumptions. Therefore, the premium rates will vary across the insurers. As the premiums will vary, the quality of service being offered may also vary," Chhabra of PolicyBazaar.com says.

When you do not need the COVID-19 plan

If you have a good health insurance policy with comprehensive cover, you may not need another plan for COVID-19 coverage. "A regular health insurance plan offers comprehensive coverage and the sum assured will be sufficient to assist you in the hour of need. If you already have a basic health plan, you don't need to buy these because your existing plan will cover the treatment and hospitalisation of all diseases, including COVID-19," says Goel.

When you should buy a COVID-19 plan

Even with a regular plan a significant part of the expenses on consumables may not be covered under the policy. "If you want an additional amount to cover up expenses like consumables, etc then you can also buy a COVID-19 plan which will provide a fixed sum assured. So the hospitalisation expenses can be covered by your regular health insurance plan and you can get an additional fixed amount to cover for your other expenses which are not covered by your health insurance plan," Naval Goel, CEO & Founder of PolicyX.com. Therefore, you can buy a benefit-based COVID-19 plan as a supplement to your regular cover.

Besides, if you do not have any health insurance plans, then you may buy a COVID plan. "In case you don't have a health insurance policy and all current options are not affordable for you, then you can look to buy a standard COVID-19 specific plan as it will give you comprehensive coverage for COVID. However, it is very important to remember that the plan will only cover you for COVID-19 and you will still be at risk, when it comes to any other critical illnesses such as cancer, diabetes, heart-related ailments, etc," Chhabra of PolicyBazaar.com says.

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