As per Insurance Regulatory and Development Authority of India (IRDAI) mentally challenged people get covered under medical insurance policies sold by Public Sector General Insurance Companies (PSGICs). Presently, the PSGICs provide mental illness cover to children if covered with or both parents simultaneously in the policy. Some PSGICs also provide mental illness cover to the persons under Employer-Employee Group Health Insurance Policies. While Life Insurance Risk coverage is offered to handicapped and mentally challenged persons by the life insurance companies (both public sector and private sector) based on their board approved underwriting policy, the disclosures made in the proposal form, every life insurance company will rate the persons to be insured from the point of view of risk assessment and underwriting as standard or sub-standard lives in order to determine acceptance of proposal and the premium to be charged. While there are no restrictions for providing insurance facilities to handicapped and mentally challenged persons, it is the professional decision of the insurance company based on their own risk bearing capacity and approach. There are no specific Regulations/Guidelines issued by the Authority in this regard.

 The Government of India is implementing a scheme by name ‘NIRAMAYA’ through which the handicapped and mentally challenged persons are covered for medical treatment upto ₹ 1 lakh. Aam Admi Bima Yojana (AABY) is also a Government Social Security Scheme being administered through Life Insurance Corporation of India (LIC) that provides life/accident insurance protection to the rural and urban poor persons (including rural landless households) and people belonging to certain identified vocational groups. One such identified vocation is “Physically Handicapped Self-Employed Persons”.

IRDAI has also notified IRDA (Rural and Social Sector Obligations) 2002 mandating every insurer to cover the specified number of lives from the defined social sector market segment. Of the categories of lives that are defined as social sector lives, “other categories of persons” is one of the categories, which includes persons with disability as defined in the Persons with Disabilities (Equal Opportunities, Protection of Rights, and Full Participation) Act, 1995 and who may not be gainfully employed; and also includes guardians who need insurance to protect spastic persons or persons with disability.

 This was stated by Shri Jayant Sinha, Minister of State in Ministry of Finance in written reply to a question in the Lok Sabha today.

Insurance coverage for disabled persons recognised subject to insurer underwriting and supported by social security schemes. Insurers may provide medical and life insurance to mentally challenged and physically handicapped persons, but coverage, acceptance and premium depend on each insurer's underwriting assessment and board-approved policies; there are no specific Authority regulations mandating terms. Government schemes and IRDA's rural and social sector obligations complement private provision by designating persons with disabilities among social sector lives and offering targeted medical and social security insurance support.