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.
