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The COVID-19 pandemic has made people in India realise the importance of having a life insurance cover to get financial protection against such uncertainties. Insurance companies suggest that there has been a significant rise in the number of policy buyers since 2020.
As the world has witnessed several fatalities due to COVID-19, many Indian’s rush to purchase a new insurance policy like health insurance and term insurance. Many first-time insurance buyers prefer buying a term plan mainly because it provides high coverage at an affordable premium.
As per the IRDA (Insurance Regulatory and Development Authority) mandate, all general and health insurance companies are directed to cover COVID-19 under the existing and new policies compulsorily. So, if you already have term insurance, you can be assured that the insurer will pay the sum assured to your family in the event of your demise due to COVID-19.
Due to the increasing number of COVID-19-related death claims, the insurance companies consider COVID-19 death as a general death and provide financial compensation to the policyholder’s family. However, if you don’t have an existing term plan, can you purchase a new policy for a COVID-19 patient?
No, if you or the person for whom you want to purchase term insurance is diagnosed with COVID-19 or show symptoms of the infection, buying a new policy can be challenging. If you have COVID-19 when purchasing term insurance, it will be treated as a pre-existing condition, and your term insurance application may be rejected.
Today, insurance companies are taking more precautions on whom they cover. If you are looking to buy a new policy, you must comply with specific requirements like providing medical proof of your health status. Some insurers may even ask you to undertake a COVID-19 RT PCR test and submit the latest report to ascertain your COVID-19 status.
Also, many insurance companies have introduced a questionnaire that you must fill as part of the application process. The questionnaire is specially designed for the buyer to disclose their COVID-19 status. It may contain questions like ‘Have you ever been advised to take a COVID-19 test? ‘Have you been tested positive for COVID-19 before?’ ‘Are you awaiting your COVID-19 test results?’ etc.
If you check any of these boxes, there are chances that the insurer will reject your policy application. This is done to filter out the applicants buying term life insurance policies, despite having COVID-19 symptoms. Regular term insurance is not priced to cover such high-risk individuals, and the insurance companies would want to know about the objective of buying a term plan in such uncertain times.
You must answer all the questions honestly and disclose the COVID-19 status. Hiding any information from the insurer can prove to be a costly mistake later. Suppose your family files a claim a few months after purchasing the policy. In that case, the insurer may undertake an investigation, and if they find out that they did not disclose any information, they will not honour the claim.
This could mean your family will not get any financial aid even as they are mourning your loss. The last thing you would want your family to face is financial hardship as they are dealing with the emotional stress of losing a family member.
Therefore, from a term insurance buyer’s perspective, you must purchase a policy early because if you reside in a high-risk area or a red zone locality, you can assure financial protection to your family.