Here are four key pointers in choosing a multi-year health insurance plan
Health insurance has always been the neglected child of most families. Prejudice bias, especially among Indians, is more prevalent and many believe that nothing bad will happen to them or their loved ones. However, the situation changed two years ago when Kovid-19 was knocking on our door. The epidemic has broken our prejudice because we have seen many of our close friends and relatives get hospitalized or even lose the battle with Kovid.
While the epidemic has made many people aware of how costly hospitalization can be and how it can harm one’s finances, it has also made people aware of the importance of health insurance. While the acceptability of health insurance in India is still fairly low, awareness has certainly increased in the last two years. No matter what stage of life you live in, it is important to have adequate health cover.
Most Indians today buy a health insurance plan on an annual basis. Considering that health insurance is a long-term product, is it worth buying a multi-year plan? Under a multi-year plan, you pay a premium for two or three years at a time. Now if you are someone who wants to save some money every moment, then many years of health insurance may be for you. In such cases, even if the premium outgo is higher, a multi-year health insurance plan may be eligible to be considered. Here is the reason:
Get Discounted Premium: Insurers often offer discounts to customers for paying multiple premiums at once. Discounts can typically range from 7% to 15% and can result in additional savings for customers. These discounted premiums are not usually available for customers who purchase a single year health plan
Lock-in facility: You may know that the amount of your premium increases every year as you get older. For example, the premium for a 40 year old person may be 30-40% higher than a 30 year old person. You can lock the amount of premium for the next 2-3 years if you choose to pay multiple years premium at once. As a result it will help you to avoid the expected increase in premiums if the insurer corrects them.
Escaping Premium Revision: The cost of healthcare in India is rising and medical inflation is a reality from which no one can escape. As medical expenses increase, insurers also revise their premium rates from time to time. By choosing to pay a multi-year premium, one is protected from any subsequent premium modifications that companies may apply over the next few years.
Tax benefits: Under Section 80D of the Income Tax Act, one can avail tax benefits up to Rs. 25,000 on health insurance premiums paid for oneself, wife and children. However, under a multi-year health insurance plan, the one-time premium paid by you can be divided proportionally each year to get tax benefits for your health plan. For example, if you pay a premium of Rs 36,000 for a three year plan that covers you, your spouse and a child, you can get a tax deduction of Rs 12,000 per year.
A health insurance plan is a long-term product; So, if you don’t want to bother renewing your policy every year and can afford a one-time higher premium cost, a multi-year health insurance plan may work to your advantage. For many years or not, a health insurance plan is your lifelong friend. So, make sure you don’t ignore it and make it your top priority
(Actuator appointed by Nikhil Kamdar, Digit Insurance)
Disclaimer: The views expressed herein are personal.
Leave a Reply