2021 saw India having one of the highest medical inflation rates among other Asian countries. At 14%, India's medical inflation rate surpassed that of China (12%), Indonesia (10%), and the Philippines (9%).
Medical inflation refers to the increase in the cost of healthcare services. This could be due to change in the cost of medical goods, medicines, professional fees, or other related expenses; or it could be due to the rise in the utilisation of services, either because of patients opting for newer and more expensive drugs and technologies, or increased demand for healthcare services arising out of greater awareness among the population.
This results in the cost of healthcare rising at a rate higher than other commodities, and the end user having to pay more than what they did earlier.
Medical inflation is one of the lead causes that leads to an increase in medical insurance premiums. Another big factor is the high number of claims that insurance companies had to face due to the pandemic that resulted in an adverse claim ratio. The impact of the increased claims can be seen in the rise in insurance premiums as they try and recover these losses. Retail insurance premiums have risen by around average of 2%, while group insurance premiums have risen by as high as 40%.
Yet, the demand for health insurance in India remained strong in FY 2022, with an overall growth of 25%. It is important for you to ensure that your insurance cover is in keeping with the rising cost of healthcare. The sum insured may have matched the cost of healthcare at one time, but that may not be the case anymore. Intelligent planning will not only provide for adequate cover when needed but will also help in optimising the quality of healthcare you receive. There are insurance companies that offer schemes where the sum insured grows each year.
It is possible to get the best insurance benefit with clever preparation. It is beneficial to buy a health insurance policy at a young age. People at that age are unlikely to suffer from serious medical conditions. The younger the age of the beneficiary, the lower the insurance premium. Most insurers offer a 'no claim' bonus, and that brings down the price of subsequent premiums. It also helps in increasing the sum insured for the plan in question.
Younger people are also less likely to suffer from pre-existing illnesses that drive up the cost of medical insurance. Increased premiums usually apply to new customers. Hence if you buy health insurance regularly from a young age, you are unlikely to be impacted by rising premiums due to medical inflation.
Insurers also check the lifestyle of the beneficiary when setting the premium. That makes it necessary to avoid habits such as smoking, chewing tobacco and using banned substances. Besides having an adverse effect on your health, they also drive up the cost of your medical insurance.
Insurance policies also have reward programs that give you discounts for maintaining a healthy lifestyle. Some policies also include free medical check-ups. It is prudent to undergo routine medical checks, eat a healthy diet, and exercise regularly.
The cost of the premium depends on the plan chosen. Family and group insurance plans usually cost less than individual plans. Despite the rising cost of group health insurance, it still costs lower than a retail insurance policy. A corporate insurance plan is a group health insurance plan taken by a company for its employees. The plan may or may not cover family members. The benefits under a corporate plan are also customizable.
However, the biggest advantage lies in zero-waiting period and no prior medical screening as everyone including employee parents can be covered from day 1. Even maternity expenses can be covered immediately.
Lastly, if you have good insurance cover, you can be confident that you will not have to incur huge medical expenses in an emergency. That assurance itself is a great factor in reducing health related issues, and in ensuring speedy recovery in case of actual illness. Hence, plan wisely; your anxieties will be much reduced, and you will most likely also benefit from the 'no claims' bonus every year.
Anuj Parekh is the Co-Founder and CEO of HealthySure