Thanks to the increase in COVID-related claims and medical inflation, health insurance premium has been on an upswing. Sample this. ManipalCigna ProHealth increased the premium of ManipalCigna ProHealth policy by 14 percent after a pause of three years.
At the same time, Star Health and Allied Insurance also raised the premium on Family Health Optima, one of its policies by about 15 per cent, and is planning to raise the cost of other products too. Also, the number of medical insurance claims rose considerably because of the second wave of pandemic, stated a recent Motilal Oswal report.
To make up for the increase in premium cost, some policy holders have found an effective alternative. Instead of paying premium for one year, they tend to buy a multi-year policy that enables them to lock the premium at the lower level.
This way, they not only spare themselves from the worry of paying premium for the next two-three years, but also manage to save some sum on the premium outgo.
Amit Chhabra, head, health insurance, Policybazaar.com says, “There are numerous reasons why a multi-year health insurance policy is beneficial. One of the greatest merits is that you stand to get a discount on your premium. For instance, a 32-year-old living in Delhi can buy a cover of Rs. 6 lakhs with a premium of Rs. 713 per month on an annual plan whereas if they opt for a 3-year plan, the premium will be Rs. 640 per month. Therefore, you can expect a 10-15 percent discount when you opt for a multi-year policy.”
He further adds, “Premium increase not only depends on medical inflation but a major part is also dependent on policyholders’ age. So, when you buy a multi-year policy, you will be able to lock your premium from the beginning of the policy term till the end.”
Nearly a quarter buy multi-year policies
As we see that there are a number of reasons for buying multi-year policy, the response of policy holders is overwhelming.
Out of all the policyholders, around 23 percent of people are now buying multi-year health insurance policies compared to 17 percent in the previous year, witnessing a spike of about 35 percent as of June 2022.
Out of this 23 percent who buy multi-year policies, 63 percent are from the 26-45 age group, while only 19 percent are from the age group of 46-60 years followed by 9 percent between the age of 18-25.
So, whether it is a new policy holder or an existing one, it is advisable to go for a multi-year medical insurance policy to save on premium outgo.
A number of policyholders are opting for multi-year health insurance policies as a way to seek discount, among other benefits.