 "Is the Bajaj Allianz term insurance plan for diabetics worth it?")
Diabetes is a growing challenge as an estimated 8.7 per cent of India's population is diabetic in the age group of 20 to 70 years. Since it is a pre-existing disease, life insurance companies can either deny you insurance or charge you a hefty premium for issuing one.
Last month, Bajaj Allianz Life, one of India’s leading private life insurers, launched an exclusive term insurance plan for Type 2 diabetic and pre-diabetic individuals. The Bajaj Allianz Life Diabetic Term Plan Sub 8 HbA1c is first of its kind protection plan in the Indian life insurance industry.
Diabetes occurs when the blood glucose level increases in the body. Type one diabetes occurs due to impairement of pancreas to produce insulin, while type 2 diabetes doesn't allow the body to use the produced insulin.
Bajaj Allianz Life Diabetic Term Plan Sub 8 HbA1c is a protection plan that offers term insurance cover to Type 2 diabetics and pre-diabetics by factoring in the nuances of their health conditions.
As the name suggests, pre-diabetics and diabetics with HbA1C (glycated haemoglobin) of up to 8 are eligible to buy this cover. According to the ICMR, HBA1C level of 5.7% to 6.4% is considered pre-diabetic and anything above 6.5% is diabetic. The Bajaj Allianz covers you upto an HBA1C level of 8.
It is important to note that a term plan for diabetes may require an assessment of your average blood sugar level over a timeframe of approximately three months to determine whether you fall under the diabetic or pre-diabetic category.
HbA1C denotes your average blood sugar levels over the last three months. If they are able to bring down their HbA1C levels, policyholders will be eligible for a 10 percent discount on the base premium at renewal the following year.
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According to the product brochure, under the diabetic policy, a 35-year-old male applicant who is diabetic and a non-smoker will have to pay an annual premium of Rs 26,838 (including GST), assuming a sum assured of Rs 1 crore and a policy tenure of 20 years.
In case of death of the policyholder during the policy term, provided the policy is in force, the nominee/legal heir will receive the sum assured on death (as chosen by the policyholder at the time of buying the policy).
The policy will terminate up on the death of the policyholder. Sum assured on death will be higher of a) 10 times annualised premium, b) 105 per cent of total premiums paid till the date of death, c) the sum assured.
Since this is a pure-term insurance product, no benefit will be payable on survival till maturity.
What are the benefits of this plan?
The policy is a pure risk cover: One of the big challenges that diabetics in India face is getting a life insurance cover. For most life policies, a high level of diabetes (especially type 2 diabetes) makes them ineligible to get a life insurance cover. This puts a lot of people in a quandary as they are not able to provide a safety net for their family members.
"The unique advantage of the Bajaj Allianz Life Diabetic Term Plan is that it is exclusively designed for Type-2 diabetics (with HBA1C level <=8) and for pre-diabetics. The cover provides comprehensive security for the family of the policyholder. In terms of the operational aspects, the policy allows the policyholder to choose from quarterly, half-yearly and annual premium payments. This is especially important since India is considered the diabetes capital of the world and diabetes is notorious for being a silent killer across the world," said Nehal Mota, Co-Founder & CEO, Finnovate, Hybrid Financial Fitness Platform.
The policy has a health and fitness plan: "For instance, the policyholders are provided with webinars and live sessions by doctors on how to manage diabetes. The plan also comes with a Keep Fit policy which encourages the diabetics to go for regular walks, exercise regularly and keep themselves fighting fit since that is the best defence mechanism against diabetes," added Mota.
Tax benefits: Firstly, the premium contributed towards the Bajaj Allianz Life Diabetic Plan is eligible for exemption Under Section 80C of the Income Tax Act. More importantly, when the policyholder passes away and the family gets the insurance benefits, this amount is entirely tax free in the hands of the recipient. This ensures substantial retention by the families on a post-tax basis.
Is this plan worth it?
"Until now, there were normal term plans available which could be bought by diabetic customers, however, the chances of issuance were extremely low. The reason — regular term plans are generally not priced by factoring in the risk involved with diabetes. Also, people who have diabetes tend to have a higher likelihood of comorbidities, which seriously hampers their chances of getting a regular term cover," said Rhishabh Garg, Head - Term Insurance, Policybazaar.com
Garg believes this plan is a worth investing in since diabetics have not been able to get plans historically. This plan will enable diabetic customers to financially secure their families immediately.
"Customers need to have clarity on the sum insured protection they would need for their families in case of an unfortunate incident. While answering the health questionnaire will have a role to play on the premium payout, individual also need to look at the policy term and premium paying frequency as it needs to align with individuals cost flow and the Human Life value at his current age. The Bajaj term life diabetic plan is definitely a worthwhile buy as it allows complete financial freedom to the family of the individual who is suffering with diabetes. While it provides tax benefits under section 80C it also facilitates the individual to better manage his health condition," said Amjad Khan, Executive Director Employee Benefit Practice and International Business, Anand Rathi Insurance Brokers Pvt. Ltd.
Is the premium worth it?
You must also know that these diabetic term plan sub 8 HbA1c plans can cost you double compared to pure term insurance. For example, for a 40 year old non-smoker, premiums excluding GST for a Rs 50 lakh cover, amounts to Rs 10,725 for 25 years. But for a diabetic, the premium would rise to Rs 22,999 under the diabetic plan. Further, the premium will vary based on your current age, gender, sum assured, HbA1c level, smoker status, health status, policy term, premium payment frequency, etc.
Point to note: A traditional term plan has only a 30 per cent chance of issuance, while a dedicated diabetic term plan has comparable issuance for diabetics similar to issuance of non-diabetics for traditional term plans.
"If a person at the age of 35 takes a 20 year diabetes cover, the annual premium comes to Rs 13,533. That may be a sunk cost (being a pure risk cover), but it is a small cost of a little over Rs1 ,000 per month to pay for a cover of as high as Rs50 lakh for diabetics. For diabetics in the sub-8 range, this policy does add value," said Mota.