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Life Insurance: Telemedical is the Way Forward

Life Insurance: Telemedical is the Way Forward

COVID-19 crises have underlined the role technology can play in underwriting insurance policies with telemedical emerging as a faster, safer and most secured way to issue insurance for the consumers considering the current environment.

Vaidyanathan Ramani,
Head – Product & Innovations,
Policybazaar.com

The threat of getting infected with the COVID-19 or the novel coronavirus, has reinforced the importance of having adequate life insurance for everyone who have financial dependants. In order to maintain social distancing and to keep customers off the medical centres for conducting a medical test before issuing a life insurance policy – a mandatory norm – insurers have even relaxed norms and have adopted alternative evaluation methods instead of relying on medical tests. Typically, a representative of the insurer visits the applicant to collect blood samples for the required medical tests. However, during the nationwide lockdown, the insurance companies chose an alternative method to issue policies to the customers by evaluating their credit scores, using tele-underwriting or relying on health declarations by applicants themselves.

Since lockdown was implemented, instead of conducting a medical test, life insurers have stated to follow tele-underwriting. Under this process, a doctor from the insurance company calls up the customer to understand their current medical history and condition. Even before the lockdown was implemented, some insurers were already issuing life insurance policies using evaluation methods like tele-underwriting but only products that involved least risk. Under life insurance industry, policies with lower sum assured are considered low-risk products as the claims will be limited. However, during the lockdown period, insurers decided to lift such criteria and those insurers who had not adopted alternative ways of evaluation have now tied up with third-party administrators (TPAs) to offer policies online with the aim of bringing maximum people under the insurance umbrella.

Telemedical – Simplifying the Buying Process

The process of issuing life insurance policy through telemedical is so successful that during the lockdown period, India’s largest online marketplace for insurance – PolicyBazaar.com issued 58 per cent of their policies through telemedical while before the COVID period, the aggregator used to sell 36 per cent of its life insurance policies through tele-medical. On an average, the company issues 28,000 life insurance policies per month of which 90 per cent policies are being sold through telemedical. The most common sum assured being bought by the customers is Rs. 50 Lakh and Rs. 1 Crore though as per the telemedical terms and conditions, the maximum sum assured that one may buy through telemedical is Rs. 2 Crore. Generally, as per telemedical grades, people up to the age of 40 years are allowed to buy a term plan with sum assured up to Rs. 2 Crores, people between the age group of 40 to 45 years can buy term plan up to a maximum of Rs. 1.5 crore while people between the age group of 45 to 50 can buy term plan up to a maximum of Rs. 1 Crore.

Know How Policies Though Telemedical Can Be Bought

Salaried Individuals looking to buy a term plan through telemedical must have an annual CTC of at least Rs. 5 Lakh while self-employed individuals need to have an earning of Rs. 10 Lakh per year. Most importantly, in order to buy a term plan through telemedical, one must be a graduate or above. The telemedical process is completely regulated by the IRDAI and is reliable from the customer’s point of view.

In addition to Tele-medical, some insurers even evaluate credit score and income range of the customers to offer a term plan. This information is available through credit bureaus and is becoming an effective tool in evaluating risk before issuing a term plan. Term Life plans offer a cover which is approximately 1000 times of the premium paid, Rs 10,000 for 1 Crore cover for a healthy 30-year individual. Hence the need to evaluate risk correctly is an absolute must.

It’s incredible that the insurance industry has evolved to do assessment of risk remotely through Tele medical and Credit Bureau check which is the need of the hour! All Leading Term Life Insurance providers are offering this in partnership with the online distribution channel.

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