After the Insurance Regulatory and Development Authority introduced the IRDAI (Insurance Products) Regulations, 2024, which removes the age cap, superseding its earlier directive not to deny health insurance to people up to 65 years of age and makes other changes, there has been much noise about how useful the amendments are. Although some insurance companies had previously offered insurance to seniors older than 65, the new rules make it mandatory for insurers not to deny insurance due to higher age. IRDAI has also reduced the moratorium period for undisclosed and disclosed pre-existing medical conditions, as defined by the insurers, from eight to five years and four to three years, respectively, which will surely benefit senior citizens and others.

Read on to learn about the changes:

How These Changes Affect Seniors’ Medical Needs

Amit Bhandari, Chief Technical Officer of Magma HDI General Insurance, says, “Previously, only a few insurers offered specialised products for this demographic beyond 65 years. But now, with all insurance companies embracing this customer segment, access to health insurance for those aged 65 and above has become much more accessible. This will facilitate access to healthcare for those who have not yet purchased a policy after their employer’s coverage expired post-retirement or due to other family obligations like marriages of children, etc. Additionally, reducing moratorium periods means that health insurance customers can heave a sigh of relief that their claim cannot be rejected because of any missed out health conditions.”

Adds Rupinderjit Singh, Vice President, Retail Health, ACKO, “This is particularly significant for lower and middle-class families who might struggle with unexpected healthcare expenses for their elderly parents. Additionally, a wider senior healthcare market could incentivise insurers to develop more affordable plans with features tailored to the specific needs of this demographic.”

Akash Tiwari, Head of Health Underwriting at Onsurity, states, “It’s important to note that the regulator never mandated insurers to impose age restrictions on products. Many insurance products have been available for years without such limitations, reflecting the industry’s intent to serve all sections of the population”, and adds, “Reducing the pre-existing disease (PED) waiting period is particularly advantageous for seniors who often contend with age-related ailments such as diabetes, hypertension, and musculoskeletal issues. Similarly, lowering the moratorium period from 8 to 5 years will enhance transparency and fairness in claims processing. Moreover, extending the moratorium to ported policies will allow seniors to switch insurers without compromising the benefits or coverages.”

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It is also observed that people with a steady income source after retirement generally continue their health policies compared to those without a regular income who discontinue policies to avoid spending on premiums. However, even if insurers offer policies for all age groups and reduce moratoriums for pre-existing diseases, how affordable would health insurance be for septuagenarians, octogenarians, and super seniors? A question begs for an answer.

How Affordable Will The Premiums Be?

“While recent policy changes improve access, challenges remain, especially regarding affordability and comprehensiveness. Despite removing age restrictions and reduced waiting periods, premiums may remain high, and coverage could still have limitations or exclusions. It is because of the higher probability of health issues in that age bracket”, says Bhandari.

Singh explains, “Premiums usually increase with age due to increasing health risks. On average, premiums rise by about 10-20 per cent for every five-year age bracket, in line with the increase in morbidity risk. Incrementally, India also has around 15 per cent healthcare inflation, which acts as a burden. The premiums for comprehensive coverage would not be in lakhs, but they still would be relatively higher than a 35-year-old.”

The premium can be higher in old age because there are higher chances of developing medical conditions. Bhandari adds, “For seniors, especially those with pre-existing conditions, premiums can indeed become quite expensive, potentially reaching into lakhs depending on age, health status, coverage, and the insurer’s pricing structure.”

Tiwari adds, “For a comprehensive health policy offering Rs 25 lakh coverage, senior citizens can expect premiums ranging from Rs 60,000 to Rs 85,000 annually. However, some policies may also impose a condition where the policyholder could bear 10-20 per cent of the claim cost.”

So, as seen here, premiums for adequate coverage remain a concern. If health policies are not affordable, the focus on inclusivity and higher insurance penetration in the country will remain a distant dream.

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How To Tackle The Affordability Issue?

Tiwari says, “In the short term, these changes may lead to higher premiums for existing products due to their direct impact on insurers’ loss ratio. This could create affordability challenges for seniors, particularly those from lower and middle-income backgrounds. However, we can expect insurers to develop products offering flexible deductible options, restricted provider access for secondary care, and second opinions for high-risk surgeries. These innovations will mitigate costs and ultimately make insurance more affordable for senior citizens.”

Singh agrees there will be more competition and transparency in the ‘more than 65-year category’ after the changes. Meanwhile, he suggests, “The government can improve the insurance plans’ affordability by increasing the tax benefit from Rs 50,000 to Rs 1 lakh under section 80D of the Income-tax Act. This would significantly improve accessibility and affordability.”

While the changes mentioned in the March 20, 2024, gazette notification focus on health insurance coverage for all age groups, seniors should also evaluate different options regarding coverage, affordability, porting, and other benefits to find the best deal.