Kolkata: In a major relief for senior citizens, the Insurance Regulatory and Development Authority of India (IRDAI) has removed the age limit restriction for buying a health insurance policy effective from April 1. Earlier, those above 65 years of age were generally not allowed to purchase a health insurance policy. The IRDAI has also reduced the waiting period from 48 months to 36 months to start health insurance coverage for pre-existing medical conditions.
India’s elderly population
India's elderly population is predicted to double to 20.8% by 2050 with the number reaching 36% by the end of the century, according to a report by the United Nations Population Fund and the International Institute for Population Sciences. According to the India Ageing Report 2023, the United Nations Population Fund (UNFPA) in collaboration with the International Institute for Population Sciences (IIPS), India's one-fifth of the population will comprise people above 60 by 2050. Further, by then of this century, the elderly will outstrip the number of children between zero and 14.
The situation before IRDAI's move
While there was no regulatory cap on age for health insurance policies, most companies had an internal policy, which did not allow them to sell health insurance products to persons over 65 years. The insurance regulator’s new move to make insurance companies sell health products to all age groups, including those above 65, is aimed at increasing penetration though there would be challenges on pricing due to higher risk perception, industry executives said.
Advantages of removing the age cap for the insurance company
The new order by IRDAI will increase the eligible base of customers, who can purchase health insurance due to the inclusion of this cohort. Some of the insurers earlier were keeping a higher age capping for customers to buy health insurance. This move will bring more competition and transparency in the 65-plus years category. Companies can now build new products or enhance the existing products by keeping in mind the comprehensive coverage to the entire family, including parents instead of the current approach of restrictive offering for senior citizens.
How do premiums go up with age?
Premiums usually increase with age due to increasing health risks. On average, premiums increase by about 10% to 20% for every five-year age bracket in line with the experience of respective insurers and the situation of increasing health inflation, which in India stands at around 15%.
Will the waiting period be longer?
As per the IRDAI mandate, waiting periods are capped to a maximum of three years from the current four years, which will see most insurers increasing the cost of insurance to all customers in the range of 10-15%.
What should senior citizens look at when buying policies?
Customers in the 65 age bracket and above may or may not have any health conditions. Users with no medical conditions should look at buying the most comprehensive cover with 100% bill payment and fewer or no wait periods. Customers with any existing health issues should evaluate multiple insurers for the options that they can have and try to optimise coverage and cost of insurance for themselves. Some of the parameters that they should consider are network coverage, room rent limit, disease sub-limits, consumable cover and other policy terms and conditions, which may curtail the payout at the time of claim.
Can senior citizens expect to buy affordable health insurance policies?
If the situation is to change for senior citizens, insurers will have to come up with innovative, affordable offerings to provide health coverage to this category that remains untapped. Several insurers have launched new products targeted at the elderly in 2023, and more companies jumping on the bandwagon could make health insurance more accessible to the silver population.
Read more: E-Insurance Mandatory For All Policy Holders From April 1
