Elders need emergency kitty to back insurance

Senior citizens have more reasons to feel happy now. Recently, the Insurance Regulatory and Development Authority has come up with a slew of measures that will give them more access to medical insurance.

For instance, if an insurance company denies cover to a senior citizen, it will have to give the reasons. Also, the companies will have to explain any hike in premiums.

The new circular says any new product launched from July 1 has to allow entry till the age of 65. Sanjay Datta, head (customer services, health and accident), ICICI Lombard, notes, "Any rise in the entry age will lead to a higher renewal age as well."

However, while the regulator is making efforts to make insurance more 'senior citizen friendly,' the big question is how much sense it makes to buy an insurance policy once you become a senior citizen.

For, the problem is inadequate cover and high premiums. For example, Star Health and Allied Insurance's Senior Citizen Red Carpet gives only two options for sum insured (Rs 100,000 and Rs 200,000).

National Health Insurance's Varistha Mediclaim has a hospitalisation cover of only Rs 100,000, though the customer can take an additional critical illness cover of Rs 200,000.

The premiums are also high. If a 65-year-old buys Bajaj Allianz's Silver Health policy, he will need to pay an annual premium of Rs 15,446 for a cover of Rs 300,000. The premium for United India Insurance's Senior Citizen Policy is Rs 11,273 (sum insured Rs 300,000) for a person above the age of 65. Star Health and Allied charges Rs 9,500 (sum insured Rs 200,000).

There are other conditions as well. Bajaj Allianz's Silver Health pays for 50 per cent expenditure arising out of any pre-existing condition from only the second year. Star Allied's policy is slightly better as it covers pre-existing diseases after one year. But it pays 50 per cent of the expenses. And United India Insurance's is the only senior citizen policy that does not cover a pre-existing disease until four renewals.

Beyond this, every policy has its own restriction, depending on the company's risk perception. Bajaj Allianz's Silver Health does not pay for joint replacement surgeries. Star Allied asks for 30 per cent co-payment for every claim.

Experts say senior citizens should have an insurance policy but also have a significant corpus. "Senior citizens will now have an insurance company to share the risk. However, the policy alone will not suffice," said Suresh Sadagopan, a certified financial planner.

And importantly, keep a part of your retirement corpus in a fixed deposit or even cash for emergencies.