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Financial security is a top concern due to the COVID-19 pandemic and many have wondered if their insurance would just cut it, in helping them ride out the current pandemic crisis.

While the pandemic produces an uncertain period for the economy, one of the places that’s playing this out in a big way is in health care — specifically, what consumers will end up paying for their care and health insurance both now and down the road.

While the pandemic produces an uncertain period for the economy, one of the places that’s playing this out in a big way is health care

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Insurance-related queries rise

As was the case with Ebola and H1N1, medical, life and short-term disability insurance inquiries have risen, as have the more complex, but equally valid, pandemic-related risks associated with workers’ compensation, business interruption, travel insurance and contingency.

Uncertainty in healthcare spreads to insurance in the sector
In the US, for instance, a report estimated that the COVID-19 testing and treatment will cost the commercial market between $35 billion (Dh125 billion) and $250 billion (Dh918 billion).

The report also found that insurance premiums in private plans could jump from 4 per cent to 40 per cent. That’s a pretty big range, and it has a lot to do with no one knowing how costs will be distributed across the health care landscape.
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Knowing who bears the cost

Although testing to see whether you are coronavirus positive is free in most countries, the average cost to treat a hospitalized patient with COVID-19 is about $30,000 (Dh110,194) in countries like the US, a study showed. This is the cost for those with insurance, without which, it just goes higher.

In some countries, like the UAE for instance, patients are treated free of cost - regardless of whether they have insurance or not.

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Apart from such countries like the UAE, it was widely seen that regardless of the amount, the tab wouldn’t be picked up entirely by patients with insurance either.

Lost an insurance-linked job?

At times, and in most countries, you may have lost your health insurance when you got laid off. Matter experts recommend that they prioritize finding a new plan.

What to do first if you lose an insurance-linked job?
It’s especially important for people to make sure they have insurance coverage immediately, especially while being in the middle of the current crisis, because they could be at significant risk of incurring a serious health problem with this pandemic.

In the US, nearly half of Americans receive health insurance and benefits through their employer. And it’s estimated that between 12 million and 35 million Americans could lose their employer-sponsored insurance if layoffs continue as they are predicted to.

But in such cases, there are government-funded insurance schemes that such laid off employees can fall back on, although the downside is that it comes at a higher cost.

In countries like the UAE, for instance, if you are moving to Dubai or Abu Dhabi, the two emirates have made health insurance mandatory for all residents.

This means that you will not be able to get a residence visa without having an insurance policy in place.

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Life insurance in COVID times

With regard to getting life insurance coverage during the coronavirus pandemic, a survey was conducted among 50 or so underwriters at various global insurers to check whether life insurance companies might stop accepting new applications due to coronavirus.

Some may not be able to get a claim for treatment and the claim may also be limited by the sum insured by your policy.

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The underwriters were also asked whether one should have any concern about life insurance companies paying their claims.

The survey found that the companies said they were willing to consider and none of them said they were shutting their doors to certain areas or pausing new business.

But there are scenarios where you may not be able to get a claim for its treatment. Your claim will also be limited by the maximum sum insured by your health insurance policy.

Situations vary with countries
In India, for example, health insurance claim due to coronavirus will be payable only if you are hospitalized for at least 24 hours.

However, if you are not hospitalized, then your policy may not cover the claim as most of the indemnity type health insurance policies generally do not cover outpatient treatment.

Furthermore, if you have been suffering from any respiratory-related disease, then your claims under a regular indemnity type health insurance policy or a specific coronavirus insurance policy might not get settled in India.
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Also, is this the case with all forms of insurances and also how does it work when it comes to insurances provided to businesses? And if it does, what cost does it come at. It’s not as easy as it looks.

What about travel insurance?

If you are visitors or tourists to a country and possess travel insurance, emergency health expenses would normally be covered. However, if you are showing symptoms before you bought the policy and travelled, it won’t be covered.

If you are visitors or tourists to a country and possess travel insurance, emergency health expenses would normally be covered.

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Insurers have generally been seeing an increase in inquiries among customers asking whether their life insurance would hold in case of death due to COVID-19, and the answer is yes, it does.

Cutting your car insurance cost?

Six out of 10 people are concerned about how they’ll be able to pay their bills, according to a recent survey conducted by Clearcover, a car insurance company.

With more than 90 per cent of the world population under stay-at-home orders and our cars sitting in our driveways, many people might be looking at reducing their car insurance costs.

Consider scraping your car insurance altogether?
Don’t consider canceling your car insurance altogether, which experts recommend could be a costly mistake that could expose you to serious financial consequences.

Asking for insurance cost aid

Since the COVID-19 pandemic started and greatly reduced driving and worldwide travel, many insurance companies have taken steps to help ease their customers’ financial burden.

If because of this crisis, you’re having difficulties paying your insurance bill either after a job cut or as a result of a salary cut, call your insurance agent and ask about financial assistance options.

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Limited exposure for insurers?

Let’s also look at it from the other end.

The spread of the novel coronavirus also compels insurers and reinsurers (who provides financial protection to insurers) to take a deeper look at exposures, as warning signs flashed that the pandemic may turn long-lasting with impacts across a broad swath of sectors.

With regard to non-life or general insurance, analysts expect the impact on claims to be relatively manageable.

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Most insurers learned the lessons from the SARS outbreak of 2003 and introduced exclusion clauses for communicable diseases and epidemics/pandemics into most non-life products such as business interruption and travel insurance.

Pandemic premiums?

COVID-19 did also present a situation for the insurance industry to support businesses that are in need of solutions to manage pandemic risk. However, there are a number of roadblocks that often prevent the creation of products to protect these businesses.

Not enough historical precedents
When it comes to how much premium is enough for such pandemic-related scenarios, there also are not enough historical precedents
Pandemic
An epidemic is declared when a disease - usually infectious - spreads in a particular region. The term pandemic applies when it spreads at a global level, affecting at least two continents. The WHO dubbed the COVID-19 outbreak a pandemic on March 11. Image Credit: Pixabay

When it comes to how much premium is enough for such pandemic-related scenarios, there also are not enough historical precedents to build credible loss curves for coronavirus,

But some approaches look at the 1918 influenza pandemic (Spanish flu) as a “worst case” pandemic scenario and attempt to account for changes in population health, accessibility of care and modern vaccines.

Some approaches look at the 1918 influenza pandemic (Spanish flu) as a “worst case” pandemic scenario

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More sophisticated approaches make use of random models that are based in epidemiological science.

These models are built from the ground up using a wide range of inputs, such as a disease’s transmissibility, lethality and point of origin, as well as if there is currently a vaccine in production.

Regardless of approach, there is not yet a widely accepted risk model all parties may comfortably use as a pricing basis.

So, how do I know if I have a good health insurance plan?
Coming to a key question that especially arises at a time like this. Do you have a good, rather a pandemic-proof, health insurance plan?

What’s worse than getting sick is getting sick and getting stuck with a huge bill. Health insurance is supposed to prevent both of those things from happening. But that’s not the case with all plans and providers, which vary wildly.

It’s important to know what each of words like premiums, deductibles, copays and coinsurance mean, because they are the best objective measure of how “good” your health insurance is. Let's look at this next.
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The Essential Benefits plan is supposed to provide a fair enough coverage. Image Credit: Gulf News

Does talk of premiums, deductibles, copays and coinsurance just leave you feeling confused and overwhelmed?

You’re not the only one, but it’s important to know what each of those words mean, because they are the best objective measure of how “good” your health insurance is, especially if you are in a position to choose from among several plans.

It’s important to know your insurance breakdown, which is the best objective measure of how “good” your health insurance is.

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• Premium is nothing but an amount that needs to be paid for a contract of insurance.

• A deductible is the amount you pay for health care services before your health insurance begins to pay. How it works: If your plan's deductible is Dh1,500, you'll pay 100 percent of eligible health care expenses until the bills total Dh1,500.

Low premiums aren't everything!
Low premiums aren't everything. A lot of people make the mistake of just looking at premiums when comparing their health plan options.

You really need to look at the types of coverage you use and how much it's going to cost by the end of the year.

For example, if you expect to have a lot of health care costs during the year (planning on having a baby, scheduling a surgery you can no longer put off, etc.), you may want to opt for a plan with a lower deductible even if the premiums you have to pay yourself are higher.

• Coinsurance is your share of the costs of a health care service. It's usually figured as a percentage of the amount we allow to be charged for services. You start paying coinsurance after you've paid your plan's deductible.

A copay is a fixed amount you pay for a health care service, usually when you receive the service. The amount can vary by the type of service.

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So, low premiums aren't everything. A lot of people make the mistake of just looking at premiums when comparing their health plan options.

You really need to look at the types of coverage you use and how much it's going to cost by the end of the year.

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On the flip side, if you expect to have few health care costs throughout the year, you can save money by going with a low-premium plan with a higher deductible.

Finding out exactly what your copays would be!
Finding out exactly what your copays would be for your specific medications could make a big difference in your out-of-pocket costs for the year, even if the plans have very similar premiums, experts advise.

Of course, there are plenty of medical events you can’t budget for, but that you want to be sure your plan will cover, such as emergency room visits, hospitalization, mental health treatments, rehabilitation and yes, the case in point – a pandemic!

Costs, quantity, and scope of these benefits vary by plan, so be mindful when determining what level of coverage you’re comfortable with.
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It is advisable to get yourself covered as healthcare costs can become a significant financial burden. Image Credit: Gulf News

FAQs: Some questions that you may come across

• Can I still buy life insurance during the COVID-19 pandemic?

You can still apply for life insurance and, if approved, you get coverage started immediately.

If you need to take a medical exam to finalize coverage, there may be limitations in availability during this time. But in most cases, you can have temporary coverage in place until you take the medical exam.

You can still apply for life insurance and, if approved, you get coverage started immediately.

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• Can I get coverage if I recently traveled to or plan to travel internationally?

Underwriting guidelines as a result of COVID-19 are constantly evolving.

For individuals who are applying, you may be further probed in the underwriting process about international travel and potential waiting periods for a decision as a result.

Has the process to check your eligibility been postponed?
In a lot of cases, checking of eligibility are postponed and require a minimum 30-day waiting period after they return to the home country. Once the 30 days have passed, individuals may reapply.

Additionally, if you have recently returned from international travel with an illness or respiratory infection, then a decision on coverage eligibility would be postponed even further.
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Travel insurance policy document. For illustrative purposes only. Image Credit: Agency

• Are life insurance premiums going up as a precaution against COVID-19?

Multiple insurers have pointed out that life insurance premium rates are not increasing as a result of COVID-19.

But insurers have also pointed out that if an applicant contracts an illness, then that could increase the cost of the premium or make an applicant ineligible for coverage.