The coronavirus outbreak has turned the attention of consumers towards insurance and insurance products. Unexpectedly, the outbreak grew into a full-fledged pandemic that brought life to a halt over most 0f 2020, and for a major part of 2021 so far.
What is Coronavirus (COVID-19)?
COVID-19 is an infectious disease that’s caused by the novel coronavirus. The first case was reported in Wuhan, China on 31 December, 2019. Since then, COVID-19 has spread across several countries in the world, including India. As the number of cases continued to rise across the past year, the focus on life insurance grew steadily. If you’re also looking for an insurance cover in the wake of the coronavirus outbreak, term insurance plans may be a good place to get started.
Coronavirus Term Insurance
COVID-19 is a new disease, and its effects were relatively unknown when the pandemic first broke out in late 2019 and early 2020. But with the cases rising on a daily basis, and with the death toll also rising, it may be of help to know that insurance companies also cover COVID-19 deaths under their term plans.
So, what is coronavirus term insurance? More importantly, is there such a thing as a COVID-19 term plan? Well, there are no specific COVID term plans, as such. However, all term insurance plans cover deaths due to COVID-19. Term insurance plans cover claims for death due to any reason. So, naturally, this means that they will cover coronavirus-related death claims also.
So, while there is no specific COVID-19 term plan, you can get coverage for deaths due to coronavirus with any term plan available in the market. Keep in mind, though, that term plans do not offer hospitalisation benefits for COVID-19 like mediclaim policies do.
A term insurance plan is a pure life insurance plan that offers the policyholder a life cover alone, for a specified period. If the policyholder passes away during the tenure of the plan, the insurance company pays out death benefits to the insured person’s nominee. On the other hand, in case the policyholder survives the policy term, the insurance company does not make any payouts to the holder.
Here is an example to understand how term insurance works in the case of coronavirus-related deaths. Assume that a person has purchased a term insurance cover of Rs. 1 crore. Let’s say the tenure of the policy is around 20 years. If the policyholder passes away due to COVID-19 disease, the insurance company will pay out the entire sum of Rs. 1 crore to the nominee of the policyholder subject to the underwriting conditions. A person who is COVID 19 positive, he/she can buy a term insurance plan post 3 months from recovery and would have to undergo medical tests as per terms and conditions specified therein.
Why Should You Buy a COVID-19 Term Plan?
As on May 4, 2021, over 2.2 lakh people in India have succumbed to the coronavirus-related illness. The numbers are still rising. In such an uncertain situation, term insurance is of utmost importance. Note that there is no plan such as a COVID 19 Term plan. However, you can get coverage for death due to coronavirus or COVID 19 with any term plan available in the market
Here are some key reasons why term insurance plans that offer coverage against COVID-19 are important.
They protect your family’s life goals in case of any unexpected developments
The COVID-19 era has amplified the uncertainty in one’s life. And in case of any untoward incident that affects the main earning member in a family, the surviving members may find it tough to meet their life goals, in addition to the emotional toll. Here is where term insurance plans can help. They make sure that your family is capable of achieving their life goals like paying for the children’s higher education or buying a house, even in case of any unfortunate development. The key idea behind term insurance is to provide financial protection to the families of the life assured.
They reduce the burden of debt on your family
In case the primary or the sole earning member of a family passes away, leaving financial liabilities or debts behind, the surviving members may find it tough to repay those dues. This is particularly hard in these times, given how COVID-19 has also affected the economy and everyday life greatly. But with a term insurance plan in place, the death benefits paid out can help your family tide over those liabilities and live life comfortably, without the burden of debt.
Term plans offer tax benefits
All term plans offer tax benefits under section 80C of the Income Tax Act, 1961. According to this section, the premiums paid towards term insurance plans can be claimed as a deduction from the total income. Additionally, any death benefits offered by term insurance plans will also be tax-free as per section 10 (10D) of the Income Tax Act, 1961. The said tax benefits are subject to the provisions specified in the Income tax Act 1961, as amended from time to time.
What is the Process to Claim COVID-19 Term Insurance?
Raising a claim for a death due to COVID-19 is a simple process. The rapid digitization of the insurance industry in India has made it easier and faster. Broadly speaking, these are the key steps you will need to follow.
- Visit the insurer’s website, fill out the claim form and submit it online.
- Along with the form, you will also need to submit certain necessary documents.
- Make sure you fill in all the details correctly and attach all the necessary documents. This will help process your claim faster.
Once you’ve submitted all the necessary paperwork, you will need to wait for the insurer to process your claim and settle it.
So, to sum up, if you are looking for specific COVID term plans, there are no term plans that are specific to COVID-19. However, death due to COVID-19 is covered under all term plans, subject to the policy terms and conditions. This means that in case you already have a term plan, COVID-19 deaths are covered under the policy. And if you purchase a new term plan, coronavirus-related deaths will also be covered therein.