Corona Kavach

IRDA has came out with guidelines with respect to Corona Kavach Policy.

This policy is called a Corona Kavach Policy. Let us see the features and benefits of it in detail

In view of the global pandemic Covid 19, IRDA has decided to mandate all general and health insurers to offer Individual Covid Standard Health Policy with the following objectives-

  • To have a Covid specific product addressing basic health insurance needs of insuring public related to Covid.
  • To have a standard product with common policy wordings across the industry.

Features & Benefits

Tenure of the Policy:

The policy period is 3 and half months, 6 and half months, and 9 and half months (including the waiting period). Hence it is always less than a year (which is the standard norm for all other health insurance products. Here, as it is a disease-specific, it is less than a year period.

Cost:

Even though the product features are same across all insurers, the price vary based on the company to company. Hence, you have to check with individual companies before buying a product.

Coverage:

The minimum coverage is Rs.50,000 and maximum cover is Rs.5,00,000

Entry Age:

The minimum age is 18 years and maximum entry age is 65 years. However, Dependent Child / children shall be covered from Day 1 of age to 25 years subject to the definition of ‘Family’

Premium Payment:

Only single premium payment option is available as it is limited for less than a year

Individual Plan / Family Floater:

This plan is available individually or as a family floater. Hence, it is acting like a typical health insurance product with this feature. Here, family means-Self, Spouse, parents and parents-in-law, and dependent Children (i.e. natural or legally adopted) between day 1 of age to 25 years

Main Product Features:

Base Cover:

The hospitalization expenses incurred by the insured person for the treatment of Covid on Positive diagnosis of Covid in a Government Authorized Diagnostic Center. The coverages are as below.

  1. Room, Boarding, Nursing Expenses as provided by the hospital or nursing home.
  2. Surgeon, Anesthetist, Medical practitioner, Consultant, special fees whether paid directly to the treating doctor or to the hospital.
  3. Anesthesia, Blood, Oxygen, Operation theater charges, surgical expenses, ventilator charges, medicines and drugs, costs towards diagnostic, PPE kit, gloves, mask, and such other expenses.
  4. ICU or ICCU expenses.
  5. Ambulance expenses to the maximum of Rs.2,000 per hospitalization.

Home Care Treatment Expenses:

It will cover the costs of treatment of Covid incurred person on availing treatment at home maximum up to 14 days per incident provided that:-

  1. The medical practioner advices the insured person to undergo treatment at home.
  2. Continues active treatment and daily monitoring expenses.
  3. Cashless home care benefit is available.
  4. If the insured willing to take the service from non-network hospitals, a prior approval is required. Insurance company will respond to the same within 2 hours of receiving the request.
  5. The expenses covered are: Diagnostic test undergone at home or at the diagnostic center, medicines prescribed in writing, consultation charges, nursing charges, medical procedure expenses or cost of a pulse oximeter, oxygen cylinder and Nebulizer.

Ayush Treatment is covered

Pre Hospitalisation:

Medical expenses incurred with respect to Covid prior to 15 days of hospitalization are also covered.

Post Hospitalisation:

Medical expenses incurred after the discharge of up to 30 days is also covered under this insurance.

Deductible:

There is no Deductible in this Policy.

Optional Cover:

Hospital Daily Cash:

The company will pay 0.5% of sum insured per day for which 24 hours of continuous hospitalization for treatment of Covid following an admissible hospitalization claim under this policy. This benefit will be payable for up to the maximum of 15 days during the policy period.

Waiting Period:

There is a waiting period of 15 days from the date of policy issued. The Company shall not be liable to make any payment under the policy in connection with or in respect of expenses till the expiry of waiting period.

Exclusions:

  • Expenses related to any admission primarily for diagnostics and evaluation purposes. Any diagnostic expenses which are not related or not incidental to the current diagnosis and treatment.
  • Rest, Cure & Rehabilitation.
  • Dietary supplements and substances that can be purchased without prescription, including but not limited to Vitamins, minerals and organic substances unless prescribed by a medical practitioner as part of hospitalization claim or Home care treatment.
  • Expenses related to any unproven treatment, services and supplies for or in connection with any treatment. Unproven treatments are treatments, procedures or supplies that lack significant medical documentation to support their effectiveness.
  • Any claim in relation to Covid where it has been diagnosed prior to Policy Start Date.
  • Any expenses incurred on Day Care treatment and OPD treatment.
  • Diagnosis /Treatment outside the geographical limits of India.
  • Testing done at a Diagnostic center which is not authorized by the Government shall not be recognized under this Policy.
  • All covers under this Policy shall cease if the Insured Person travels to any country placed under travel restriction by the Government of India.

Bottom Line:

If someone is willing to buy the health insurance immediately with the fear of corona virus, then this policy may be suitable to you.

Individuals with Existing Health Cover

Those who are having health insurance may no need to buy this policy. Instead, they can enhance the cover either in the base plan or buy a super top-up plan. 

FAQ on Bharat Bond ETF

Any Better Alternatives?

Bharat Bond ETF is an exchange traded fund with a Target Maturity Date.

It will invest in bonds of Central public sector enterprises (CPSEs), Central Public Sector Undertakings (CPSUs), Central Public Financial Institutions (CPFIs) and other Government organizations.

NFO (New Fund Offer) offer period is 12th – 20th Dec 2019.

It is a Government of India Initiative to help public-sector organizations with their borrowing requirements.

An Exchange-Traded fund can be freely traded live during market hours and is a low-cost product.

  • Bharat Bond ETF is expected to have a TER (Total Expense Ratio) of about 0.0005% i.e. Rs.1 for 2 Lakh Investment. source BharatBond.in.
  • Encourage institutional buyers to participate like insurance companies, pension funds, mutual funds etc.
  • Increase trading and liquidity in these bonds.

What is a Fixed maturity ETF?

This kind of ETF has a Fixed Maturity Date. Bharat Bond ETF has 2 types: 3 years and 10 years. The underlying index will also mature at the same time. For example: BHARAT Bond ETF – April 2023 denotes the maturity date.

What is the underlying index?

Nifty BHARAT Bond Index which will be initially constructed with AAA bonds. If a bond falls below AAA but is above BBB- (investment grade), the bond will be removed from the index only in the next calendar quarter. Only if becomes junk will the bond be removed from the index in five days.

Don’t assume it will hold only AAA Bonds

Current Portfolio of NIFTY BHARAT BOND INDEX

Source: NSEindia

What is the difference between an open-ended ETF and a fixed maturity ETF?

In an open-ended ETF, the fund will keep buying new bonds upon maturity of the existing bonds. A fixed maturity ETF will try and hold the bonds up to maturity.  For example: a 3 year Bharat Bond ETF will hold bonds that mature within 12 months of the maturity date. The residual maturity of the 3-Y ETF is 282 years.

What are the advantages of a fixed-maturity ETF?

This combines the ability to sell at the exchange at any time and eliminates interest rate risk and credit rating change risk if the bonds are held up to maturity and do not default.

Is the return of principal guaranteed?

No. While the underlying risks are comfortably and acceptably low, no such guarantees can be made.

Are the Returns Guaranteed?

No.

Are returns predictable? Will I get the indicated yield if I hold until maturity?

Returns are not predictable. Even if one holds the ETF until maturity, the final returns will be governed by market forces. For example: the interest received by the fund will be reinvested into the portfolio. The yield of the bonds could be lower at that time (bonds priced higher) resulting in a deviation from the estimated yield on creation. This is known as Re-Investment Risk(People in my Whatsapp Group might understand this as this has been communicated to them). Over 3 years, this is likely to be minimal but can be significant over a 10 year period.

Any changes in the bond portfolio, especially a rating downgrade resulting in the need to sell the bonds, will impact yields.

Public sector bonds are the safest, are they not?

Relative to a corporate bond = YES. This does not mean default is not possible. Five years ago how many would have believed a 100% government-controlled company like BSNL would find it difficult to pay staff salaries?

How to invest in Bharat Bond ETF?

Obviously, through Demat Account. No other route is available currently.

Taxation in the Bharat Bond ETF?

The maturity date of 3 year bond is a little more than three years. This is to ensure the gains will be denoted as long-term capital gains with 20% tax after indexation. This means that the purchase price can be inflated using the cost inflation index before computing the gains. So effective tax rate would be about 18-20% depending on the rate of inflation.

Pls note the rate is applicable for all tax slabs. For those in the 5% slab, a simple FD will work better.

For senior citizens, this is not particularly attractive as fixed deposits carry an Rs. 50,000 income tax exemption.

For a sale mid-term, the gains will be added to income and taxed as per slab.

Min & Max Investment for Retail Investor?

Min: 1000, Max: 2 Lakhs (Only for NFO period).

Any Better Alternatives?

A carefully chosen Arbitrage Fund that don’t hold risky bonds, better for those in 20% & 30% tax slab. Arbitrage fund can be redeemed at any point of time with no exit load. (There can be some funds with 30 days waiting period).

Summary

People who want to still try the Bharat Bond ETF & have demat account can go ahead with 3 yrs term. 10 yrs will be too long as it may carry re-investment risk, liquidity risk and more volatility.

If you still have any more questions, kindly send me on 9029868078 / kaustubhd.1984@gmail.com alongwith your complete details & location.