Diabetes is one of the most common health problems in our country, with approximately 12-13 per cent of our adult population being affected by it. While coping with diabetes is painful enough in itself, further critical complications can arise from it--like heart disease, risk of strokes, eyesight problems, kidney failure and possible limb amputation.
Till a few years back, there were no insurance products available to cover this disease. However, Prudential ICICI Life Insurance has launched a product called Diabetes Care. This product is a critical illness insurance policy for Type 2 diabetics and pre-diabetics (those who have glucose levels and if not controlled could develop into diabetes in the future).
This product offers them a fixed payout, irrespective of actual expenses incurred, on the occurrence of the first of 6 critical illnesses due to diabetes, which are heart attack, coronary artery bypass graft, stroke, renal (kidney) failure, cancer and a major organ transplant as a recipient. Moreover, it also provides riders which pay for laser treatment of diabetic retinopathy and limb amputation.
While there are three options for critical illness covers of Rs 3, 5 and 10 lakh, the riders pay 10 per cent of the base sum assured. The insurance policy is for a period of five years with a minimum age of entry at 25 and maximum age at 60. The premium paid under this policy is eligible for deduction under u/s 80D.
A novel feature of this policy is that the premiums are dynamic. Under its wellness programme, the policy entitles the insured to get two free medical tests every year and one compulsory medical check-up with detailed tests done annually for the first 4 years. It also encourages them to keep their diabetes under check by following the health care plan suggested by a consulting doctor.
If the test results show that there is good control over diabetes, then the base premium is reduced for the following year, ranging from 5 per cent to 30 per cent of the first year base premium, depending on the age of the insured. However, if the test results show worsening diabetic control, the premiums go up in the subsequent year by 10 per cent to 17.5 per cent.
While this policy is novel, in the sense that it provides insurance for diabetics and also encourages them to control their diabetes through its wellness program and dynamic premiums, there are certain points that can be improved upon.
The tenure of this policy seems to be too short. Does the insured need to get a new policy every 5 years? The tenure could be increased to a longer period of say, 25-30 years, since the company retains the right to charge higher premiums if the situation worsens.
Another condition is that, in case the critical illness is diagnosed in the first 6 months of the policy, there will be no claim payout and the premium will be returned to the insured. In case the critical illness is diagnosed between 6 and 12 months, then too only 50 per cent of the sum assured is paid out. It is only after the first year that the full risk cover is payable. While this may be acceptable in longer duration policies, it seems too much for a 5-year policy.
In case of any doubt regarding the accuracy of the diagnosis, the company has the right to appoint a medical specialist to examine the insured's case. The decision of this medical specialist would be binding on both the insurer and the insured. While the insurance company has every right to cross-verify the diagnosis, there should be a better method of dispute resolution, rather than make the decision of a medical specialist it has appointed, binding on the insured.
Despite these issues, the policy is the first step towards addressing issues related to diabetes. A variant of the policy, introduced recently is called Diabetes Care Plus, which is a critical illness plus life insurance policy.
The writer is director, Touchstone Wealth Planner
