Commercial flying depends on medical fitness as much as technical skill. Any sudden illness or medical condition can cost a pilot their licence to fly. To manage this risk, some pilots choose specialised insurance that covers loss of income if they are grounded for health reasons.
Known as loss of licence (LoL) insurance, this provides financial compensation if a pilot is declared medically unfit to fly and loses the right to operate aircraft.
Adarsh Agarwal, Appointed Actuary at Digit Insurance, explained, “The demand for loss of licence insurance for pilots has seen a rise in recent years due to the compelling financial security it offers in a profession with unique and stringent risks.”
Aviation rules set strict medical standards for pilots. Any illness, injury, or health condition can lead to suspension or permanent cancellation of a flying licence.
According to Agarwal, LoL insurance is designed to address these risks by offering income support if a pilot is grounded.
How it works?
LoL insurance differs from a standard personal accident policy. Agarwal said, “A standard personal accident policy covers accidental death or severe dismemberment. Loss of licence insurance is focused on protecting against the loss of earning ability due to any medical condition that prevents the pilot from flying, not just accidents.”
Rakesh Goyal, Director at Probus, said, “Loss of licence policy is an indemnity policy that protects the pilot from the financial impact that could result from permanent loss of flying licence due to medical reasons and not just accidents.”
In some cases, group policies arranged by pilot associations have helped settle claims quickly. For example, following an Air India crash, a pilot holding an LoL policy through the Federation of Indian Pilots association received a claim of ₹2.67 crore within two working days.
Coverage and sum insured
According to Digit Insurance, the sum insured depends on the pilot’s role, income, age, and employer policy. It may cover a percentage of monthly earnings if a pilot is temporarily grounded.
In the case of permanent unfitness, the full sum insured is paid.
Goyal said the sum insured can range from ₹50 lakh to ₹5 crore for commercial pilots. It is often calculated as 3-5 times the annual salary. Private pilots can choose a cover amount according to their income or experience.
Conditions and exclusions
LoL insurance policies include certain conditions and exclusions. Agarwal said pilots should check terms carefully, as pre-existing medical issues are generally excluded.
There is usually a waiting period of 60-90 days for temporary unfitness.
Incapacities from self-inflicted injuries or substance misuse are not covered. Mental health conditions such as psychosis or epilepsy may have limited benefits depending on the policy.
Goyal added that some policies may exclude mental health issues unless specifically covered.
Claims for pilots employed abroad may need certification from India’s aviation regulator (DGCA).
Policies may also specify that benefits must be paid in India and in Indian currency. Some permanent unfitness claims require a survival period of around 30 days.
Premiums
Premiums vary as per factors such as the pilot’s age, health, sum insured, aircraft type, and geography. Agarwal said this cover is mostly offered on a group basis through pilot organisations or employers, which can help lower costs.
Goyal said, “The premium rate varies from 0.3% to 2.5%. For a sum insured of ₹50 lakh to ₹5 crore, the premium might come around ₹30,000 to ₹1.50 lakh for commercial pilots. For private pilots, it can range from ₹5,000 to ₹30,000.”
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