Disability is a condition, in which a person is limited in abilities due to physical or mental defects relative to the norm. For this reason, people with disabilities are considered a problematic client group, which financial institutions are biased against and raise obstacles to receiving certain services.
It is only fair to say that people with disabilities often do not comply with the strict compliance rules of the regulator. Thus, according to a survey by the Agency of the Republic of Kazakhstan for regulation and development of the financial market (ARDFM), persons with disabilities have low solvency indicators, in particular, the balance of income and expenses. More than half of respondents (57%), after paying all mandatory payments and necessary expenses, do not have the possibility of saving, which indicates low incomes of respondents. And only 15.2% of respondents have the money they save.
According to the Ministry of Labor and Social Protection of Population, about 162 billion tenge has been allocated from the national budget to pay state social benefits for disability and loss of a breadwinner since the year beginning. In addition to that, the State Social Insurance Fund made social payments for disability and for the loss of a breadwinner in the amount of about 19.9 billion tenge. As of May 1, the number of aid recipients of state disability assistance is about 533.1 thousand people. Some of these payments could potentially be covered by life insurance companies.
Thus, one of the most effective ways of social risk coverage in many developed countries is life insurance. It compensates for the loss of income due to loss of health, and can provide medical care in case of illness. The impetus for the development of this type of insurance was not only the cumulative, but also the risk component. This is due, first of all, to the insufficiency of ensuring social protection of the population by the existing systems of state insurance. Insurance contributes to the creation of a kind of reserve fund in case something happens to a person.
“In fact, insurance companies perform a social role. For example, for disabilities that occur as a result of an injury at work, the insured receive insurance benefits in an amount greater than the state pays. Besides, they can use insurance services if the disability is not related to underwriting restrictions. For example, disabled people have the right to conclude insurance contracts under retirement annuity contracts. People with disabilities are accepted for insurance regardless of their state of health, there are no exceptions in this insurance class,” explains Meirzhan Medeubayev, Deputy Chairman of the Board of Halyk-Life.
Product Availability
The Ministry of Labor and Social Protection of Population maintains statistics only on state payments. ARDFM and the National Bank do not publish information on the participation of persons with disabilities in the financial life of the country. Life insurers know their clients, but the volume of their insurance is scanty, and the topic itself is a “thin ice”. By the way, perhaps that is why the majority of LICs decide to remain silent and not be responsible for the editorial's request.
“Practically all the main programs of LIC Nomad Life are available for people with disabilities: endowment, cumulative investment insurance, retirement annuity, compulsory accident insurance of employees (CAI), voluntary employee insurance against accident (VAI). Term insurance programs are available for people with the 3rd disability group. Within the framework of the Law of the Republic of Kazakhstan on compulsory insurance of employees against accidents, we also make payments to employees of organizations that have concluded relevant insurance contracts if, as a result of an accident at work, the employee loses his professional ability to work,” the press service of the insurer informed.
Let us review by insurance classes. Disabled people of the first and second groups, if disability is established indefinitely, have the right to conclude a retirement annuity agreement in accordance with the terms of insurance, that is, they must reach a certain age and have a sufficiency threshold of pension savings on their account in the UAPF for transferring them to a life insurance company.
“In compulsory accident insurance of employees in the performance of labor duties upon receipt of an industrial injury leading to occupational disability (OD) of 30% -100% for an employee, the injured will receive insurance benefits from the LIC allowed by law,” explains Oleg Khanin, the Board Chairman of LIC Kommesk-Omir.
Freedom Life has a different approach. The company’s life insurance programs include insurance payments in case of death, functional loss or disability confirmation. Persons who have already been diagnosed with a disability are not accepted for insurance under such programs. However, people with disabilities can purchase annuity insurance programs such as Freedom Support, Retirement Annuity, Travel Insurance. “Persons with confirmed disabilities cannot be insured under endowment life insurance programs, but they can be insurants and beneficiaries. Disability is the event in connection with which the insurance benefit is paid. As a consequence, if the disability is already confirmed, then insurance cannot be offered. (…) Therefore, people with disabilities can be insurants, beneficiaries of a fairly large number of insurance programs right now. They, however, can be insured under those programs that do not include payments for disability and deaths directly or indirectly related to the established disability,” commented Azamat Yerdessov, Chairman of the Board of LIC Freedom Life.
However, it should be noted that accident insurance or endowment is not a very burning topic for the disabled, the demand for this service cannot be called roaring. Many, for obvious reasons, lead secluded lives, spending all or almost all of their time in their homes, and are therefore less at risk than active people. Some companies, however, try to avoid special customers.
“If disability is not directly related to an increased risk of an insured event, for instance, a person who has a visual impairment is no different from an ordinary client in terms of underwriting. But if a person has a disability with a chronic disease of the cardiovascular system, then there may be restrictions on concluding an insurance contract. Or, on the contrary, an accident is an insurance event that is not a disease, for example, death or disability from a fall from a height or road traffic accident, then there are no obstacles for a disabled person with a disease in concluding an accident insurance contract,” says Meirzhan Medeubayev.
In endowment life insurance (ULI), the contract terms and tariffs depend on the risks taken, age, health status and the presence of diseases, disability groups, and professional activities. “Investment return on endowment products can be received by the insured or beneficiary. Along with that, people with disabilities can be insurants, for example, by insuring life of their children, parents and other family members. Also, in endowment, if there is an agreement with additional insurance conditions, the insured person will receive the benefit if he acquired a disability during the insurance period,” explains Oleg Khanin.
There is a future
Life insurers do not look down on people with disabilities but they are clearly aware that these are high-risk clients. Therefore, new game rules should be created on the market. “This should be a comprehensive solution, but at least an adapted underwriting policy, which clearly describes the correlation between specific types of disability and possibility of evaluating the insurance coverage of a disabled person,” says the Deputy Chairman of the Board of Halyk-Life.
Nomad Life takes a different approach: “We have no restrictions for people with disabilities. We are constantly working to improve business processes for all clients, without any exceptions or limitations. Nomad Life is doing a tremendous job in this direction by improving the quality of work of clients' online accounts from year to year.”
Photos are from open sources.
