Covid-19 shot before cover: Max Life, Tata AIA make vaccination must for term life

Max Life and Tata AIA have taken the lead in asking for mandatory Covid-19 vaccine certificates for buyers of term life insurance — opening the doors for other insurers to follow suit to reduce future claims payouts, but depriving cover to those who have not yet been inoculated.

While Max Life is issuing term covers to people over the age of 45 only if they are able to produce their final vaccination certificates, Tata AIA is issuing policies, irrespective of age, only to those who have received their first shot.

The trigger for these conditions for issuing new term policies seems to have originated from reinsurers such as Munich Re and Swiss Re, who are the biggest underwriters of risk for the domestic insurance companies.

“To ensure the highest degree of financial protection to our policyholders, we ensure their interests are protected at all times,” a Tata AIA spokesperson said in reply to ET’s emailed queries on the topic. “Our practices and policies reflect emerging realities. We continue to stay consumer-focused as well as prudent in our practices.” Max Life didn’t comment.

Scrutinising policyholders on their vaccination status could potentially solve two purposes for insurance companies.

More Scrutiny for Hesitant

First, it would help insurers tighten risk management, where a non-vaccinated policyholder is deemed riskier to underwrite, thereby saving the insurer from increased claims burden in the event of a third wave. Second, such an enquiry process could also help companies differentiate policyholders that are by nature “vaccine-hesitant,” and enforce higher levels of scrutiny for them.

“The logic is similar to how buying insurance is harder for, say, a long-time smoker. Insurance companies could operate under the assumption that those not getting access to vaccines after a certain period of time could be doing so because they don’t want to get vaccinated at all,” said an industry executive.

On the flip side however, this will negatively impact people who have not been inoculated yet. This could be because of the shortage of vaccines and in cases where a final vaccination certificate is sought, a person will have to wait for 84 days before he can take the second shot. As of Sunday, only 23 crore people had taken their first shot in a country of 1.38 billion.

“Even a single shot displays intent, and insurers should not penalise customers for not being able to access vaccines when there is shortage,” said Mahavir Chopra, chief executive of Beshak.org, a consumer awareness platform for insurance.

In a country with an already poor insurance cover, the purchase of a safety net has become more expensive, with premia shooting up after claims surged due to virus infections.

Cooling off Period

As part of tightening the procedure, ICICI Prudential, Tata AIA and Aegon Life have also introduced a seven to 15 day “cooling off period” post vaccination, where new policy applications are being temporarily deferred.

“It has been observed, at times, that after being vaccinated against Covid-19, a few individuals display hypersensitivity or other reactions,” said an ICICI Pru spokesperson. “Typically, this takes anywhere between seven to 15 days to subside and hence, a cooling off period is needed. At ICICI Prudential Life, we have a cooling off period of just seven days.”

Aegon Life didn’t respond to ET’s queries. Tata AIA didn’t comment on its cooling off period.

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