During the ongoing pandemic, insurance products — health and term-life insurance in particular — have started gaining traction. More and more people are now becoming aware of the importance of having health or life insurance, with insurance shifting from being a push product to becoming a pull product.
Even though people seem well in control of their financial health and related matters, they are extremely worried about the risk to their and their family’s physical health. As a result, the perception of the importance of health and life insurance is now more than ever before. This indicates that both life and health insurance have started becoming the cornerstone of personal financial planning in times of COVID-19.
The pandemic has definitely accelerated awareness about insurance in India where coverage remains relatively low despite the country being the world’s second-most populous with a population of 1.35 billion.
Health cover
Since the nationwide lockdown due to COVID-19 in the last week of March, demand for health insurance policies has seen a huge spurt. As per general and specialised health insurers, online sales of health insurance policies have doubled between March and May compared with the same period of the previous year.
Business — in terms of fresh policies issued — of the health insurance industry grew by 40% in the last two months while the year-on-year growth was 13%. A prominent reason for the continued growth of the health insurance business is health insurers are doing their best to ensure seamless service and support to policyholders.
Most insurers have started offering health insurance policies through tele-underwriting or telemedical process in the place of physical medical check up to follow social distancing norms and keep people off the medical centres. Through telemedical process, you can buy a health insurance policy of up to ₹1 crore sum insured. To make sure that the maximum number of people are covered under some kind of health cover against COVID-19, on the directions of IRDAI, general and health insurers have started offering Corona Kavach, a standard, indemnity-based health plan and Corona Rakshak, a fixed-benefit health insurance policy. PolicyBazaar.com sells almost 1,000 policies per day on an average with a conversion rate of 10-15%. Customers buying these policies are mostly young individuals. The most preferred tenure is 9.5 months with 70% customers choosing the tenure while buying the policy. Similarly, the most preferred sum insured is ₹5 lakh, which is the maximum allowed under the policy construct. Among Corona Kavach and Corona Rakshak, 85% of customers opt for Kavach and 15%, Rakshak.
People buying health insurance plans with a higher sum insured have increased drastically. Earlier, the share of people buying health insurance plans with ₹20 lakh — ₹1 crore sum insured was less than 5%. However, in the situation, the share has now increased to 50% over the last two-three months. Moreover, insurers are now focussed on how they can use digital technology to better solve customers’ access problems. With everyone being sure that COVID-19 is here to stay for a while, most processes in the insurance sector are now shifting online.
Term life cover
The pandemic has also changed the people’s perception of term life insurance as the demand for such policies has seen a significant rise since the lockdown began. Reports suggest that demand for term insurance picks up during epidemics, with insurers also reporting a rise in the number of queries for pandemic covers by businesses even as savings’ policies may remain weak.
Surely, COVID-19 has awakened public awareness of the need for term life insurance.
With the world almost shut down and media reports filled with stories of tragic loss of life, people are becoming increasingly aware that a long life is not something they can take for granted. Reports suggest that online sales of term life insurance have increased by 40% in the last 3.5 months. Life insurers have also started to ramp up their telemedical tools with an increased volume of physicians and other health professionals lined up to consult with patients who are concerned about visiting physical centres.
Issuance of life insurance policies through the telemedical process is catching on. During the lockdown, PolicyBazaar.com issued 58% of the policies via the online process compared with the pre-COVID-19 period figure of 36%. Talking about life insurance, under the telemedical process, the insurer checks the credit score of the customer along with his/her financial history of before issuing a term plan.
This is because term plans have a sum assured that is approximately 1000 times of the premium paid. While buying a term plan, the maximum sum assured that one can opt while taking a plan through telemedical process is ₹2 crore.
(The author is Health Business Head, Policybazaar.com)