Day 1 Newborn Coverage Makes No Sense – Here's Why And What You Should Know

Though 'Day 1 Newborn Coverage' may sound good on paper, in practice, it usually provides very little protection. Most of these policies provide only for basic hospitalization of the newborn in the event of complications, and even that for a limited period — typically the first 90 days. It does not cover usual expenses such as vaccination, routine check-ups, or Neonatal Intensive Care Unit (NICU) stays beyond a certain limit.

Issues With Day 1 Coverage Policies 

“There are three key issues in these policies,” says Abhishek Kumar, a Securities and Exchange Board of India (Sebi)-registered investment advisor (RIA), and founder and chief investment advisor of SahajMoney, a financial planning firm. 

Often, Neonatal Intensive Care Unit (NICU) stays are excluded under "complications" requiring separate waiting periods. Many congenital conditions (responsible for 80 per cent of NICU cases) are excluded despite coverage claims.  Finally, there are hidden dependencies on maternity waiting periods (e.g., nine months) even after paying premiums.  

“Commonly, Day one newborn protection entails in-hospital stay of the infant and occasionally protection of complications during delivery — but usually, the coverage is limited to Rs 10,000 to Rs 50,000, which falls short in instances of serious conditions,” says Kunal Varma, co-founder and CEO, Freo, an app-based credit line. It very seldom covers ante-- or post-natal treatments, immunization, or NICU fees except up to a limit.

Hence, there are certain limitations, such as no coverage for preterm births or NICU admissions.  “Also, congenital anomaly treatments (e.g., heart defects) are excluded. Finally, one is required to add a newborn child within 30-45 days of birth to activate coverage,” says Kumar. 

What To Do Instead 

“A smarter route for new parents is to opt for a family floater health insurance plan that allows the newborn to be added after 90 days of birth, which is standard for most comprehensive health plans. Some plans also allow you to add the baby immediately after discharge, though the premium may rise,” says Varma. 

“From 2022 onwards, there are a few Insurance Regulatory Development Authority of India (Irdai)-compliant policies which provide explicit NICU coverage, so one can explore these options. Also, group health coverage through an employer, which often has fewer exclusions for newborns, is a good option.  Finally, verify network hospitals with in-house NICUs for reimbursement claims,” says Kumar.

In short, instead of banking on thin Day 1 coverage, constructing a flexible, layered health insurance strategy pays off over the long term for the child and the parents.

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