Recently, some media reports have claimed that the age limit on health insurance purchases has been removed. Is this true? If yes, will this benefit a large segment of the population?
The IRDAI circular dated 20th March 2024, F. No. IRDAI/Reg/8/202/2024 (thanks to Kamlesh Rao for sharing it on the Facebook group Asan Ideas for Wealth) says on page 37,
“6. Product design:
6.1 Insurers shall ensure that they offer health insurance products to cater to all age groups.
6.2 Insurers may design products specifically for senior citizens, students, children, maternity and any other group as specified by the Competent Authority.
6.3 Insurers shall endeavour to offer coverage for persons with all types of existing medical conditions”.
Does this mean the “age limit on health insurance purchases has been removed”, and does it mean all pre-existing conditions will now be covered”?
Not quite. The circular only says health insurers should create products for all age groups. It does not say senior citizens of all ages can purchase existing products!
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Insuring senior citizens is a nightmare for any insurance company that wishes to remain profitable (and therefore exist). People in this age group have all kinds of pre-existing diseases. They are more likely to develop new conditions with each passing year, and what is worse, they are likely to be hospitalised frequently – each year or perhaps more than once a year. And if there is a surge in hospitalizations, insurers will have a tough time paying claims.
If I were in charge of creating health insurance products, I would tell the world that the company is “developing” a special product for senior citizens to “comply” with the regulation and leave it at that.
When insurers release these “special” products, expect them to be extremely expensive. Expect the acceptance process to be much more rigorous (expect denials). Expect the premiums to be hiked every 2-3 years due to age and, more often, to lack of profitability.
IRDAI has only said, “Insurers shall endeavour to offer coverage for persons with all types of existing medical conditions”. So, they are not obliged to do so for both senior citizens and younger buyers.
This means that even if an exclusive senior citizen product is created to satisfy clause 6.1, insurers are free to restrict entry according to pre-existing medical conditions.
So, this is not some new dawn in health insurance. It would only benefit healthy senior citizens who can afford high premiums. Even then, there is no guarantee that claims will be paid without hassle. It is better to build or allocate a robust corpus for handling hospitalizations.
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