Wednesday, January 8, 2014

IRDA proposes life insurance cover for persons with disabilities

Dear Friends,

After the Hon'ble High Court of Delhi's judgement in a related matter on Insurance (Refer my blog entry titled "Extra Premium for Insurance or Reduced Insurance amount- both are discriminatory against the employees with disabilities), wherein the Hon’ble court agreed that charging extra premium from employees with disabilities was indeed a discrimination on the basis of disability and therefore it directed the postal life insurance to provide equal insurance coverage and not charge extra premium from the employees with disabilities, the regulator IRDA is working on a proposal for life to cover the persons with disabilities.

However, what I see from the proposal, certain categories of disabilities, particularly that are not static and likely to change, say for example a person with mental illness (under rehabilitation), or a person with low vision - likely to turn completely blind, will continue to face discrimination.

The problem is the actuaries are not trained in to this aspect of disability and the potential of persons with disabilities. Life can be uncertain for you and me alike irrespective of disabilities, but actuaries tend to presume that a person with disability is more likely to die in comparison to non-disabled is actually a myth.

I had indicated the road ahead in the earlier post after the Court judgement which I am reproducing here:

The Road Ahead
I see this judgment  as a milestone in the disability rights movement with far reaching implications not only in India but also beyond India and especially in European countries where the Actuaries continue to discriminate against persons with disabilities by under-valuing their lives. However, India, its Courts and the persons with disabilities are very progressive on this front and the western countries can follow suit at least on this count.
This is just a beginning. We need a well devised future strategy  to dismantle the entire regime of discrimination that is prevailing in the insurance sector and the immediate challenges are:
(a) The insurance sector still discriminates on the basis of etiology of the disability i.e. from birth and after birth; neurological or physical and rates their lives accordingly which has again no scientific base.
(b) The persons with neurological disabilities are still not allowed any insurance policy and needs to be challenged.
(c) PLI is an insurance scheme for the benefit of government employees hence it will cover a very small section of citizens with disabilities. Those who are outside the government jobs especially those in rural areas are far away from reaping the benefits of insurance.
(d) The Actuaries who are in the business of assessing the life risks are not aware of the real challenges and the lives of the persons with disabilities and they continue to live in their own world and decide on their own whims, the risk calculation of the life of a person with disabilities. They need to be sensitized and made aware.
(e) The entire literature on insurance that I had to read while pursuing this case from outside reinforced the stereotypes about persons with disability and their proneness to accident. Hence, we need new literature for future actuaries to understand that Disability can not be treated always as a negative health profile. And that living with disability was distinct from suffering from a life threatening disease.
(f) There is a need to raise awareness that a person with visual impairment or with hearing impairment or with neurological impairment also enjoys good health like anybody else.
(g) The rules of Insurance sector needs to be changed in light of this judgement and applied across the sector. All insurance  issuing companies - be it private or government have to factor in the principals of this judgement and make amends.
(h) We need to take this awareness to the most marginalized persons with disabilities in rural areas through several means. 

I am sure we all are up for it and would take this to its logical end. Here is  news coverage regarding the IRDA proposal from Business Standard:-

Currently, there are no definitive guidelines defining the cover for people with disability
M Saraswathy  |  Mumbai  January 4, 2014 Last Updated at 00:32 IST

Insurance Regulatory and Development Authority (Irda) is looking to bring out a proposal for providing life insurance cover for the differently abled. While disability is not explicitly excluded from life insurance policies, there are no definitive guidelines defining the cover for such individuals.

“The proposal is at a discussion stage at the actuarial department. We will soon bring out a discussion paper on this,” said a senior IRDA official. This proposal will first be presented as a paper to life insurers for their feedback and then, detailed guidelines would be formulated.

At present, disability insurance is provided under personal accident policies by general insurance companies. Here, the policy provides for income replacement if the policyholder gets physically injured in any accident leading to loss of income for the family.  Disability is also covered by life insurance companies, wherein a cover is provided for accidental disability. These products are offered both, as a policy and as a rider with an insurance plan. If anything happens to the insured during the policy tenure, the insurance company pays him/her a lump-sum amount. However, this does not provide any protection for disabilities existing from one's birth or early childhood.

Insurance sector officials said that there, the regulator would clearly define what is disability, the types of disability-permanent or ongoing. The various ailments are also expected to be classified either as static and permanent, which would include polio and physical disability like loss of sight at birth, loss of hand/leg at birth among others. Other types of ongoing ailments like severe Hepatitis B, cancer of the last stages and severe damage to the lungs or heart would be put into a separate category.

“While permanent and static disability is expected to be included as the category that would be covered by life insurance, progressive and critical stages of ailments are likely to be excluded from coverage. This is because such ailments are very risky to be covered, from an insurance perspective,” said a senior life insurance official.

Officials close to this development said that at a future stage, when there is adequate data and research on these ailments, such patients could be provided life insurance cover, albeit at a higher premium.

Not all types of cancer are excluded from life insurance coverage. While patients in the last stages of such life-threatening diseases are excluded from life insurance coverage, others at an early stage are not denied a cover. These patients usually pay 30-40 per cent higher premium than regular policyholders, due to the higher risk involved in their coverage.  

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