A recent survey by Local circles has mentioned that health insurance premiums have increased by 25% in the last 12 months as reported by the participant health insurance policyholders. This drastic increase in premiums could be traced back to 2022, a period when insurance companies faced huge losses due to Covid-19 claim settlements and heavily increased premiums anticipating another wave of COVID. After the second wave the number of people getting hospitalized due to Covid has reduced drastically but the upward trend in health insurance premiums continued.
From then the double digit increase of health insurance premiums continued and most of the policyholders have experienced their premiums shooting up every year. The premium increase has not been compensated by increase in claim satisfaction as the majority of the policyholders complained about the delay in claim settlement.
If the present trend continues it would be difficult for common people, especially middle class people to purchase a health insurance policy that could satisfy their insurance needs. But there is a way out of this situation – to reduce the premium outgo. In this article we discuss various ways that could be employed to reduce your health insurance premiums.
- Buy family floater: The most basic thing one can do is to opt for a family floater health insurance policy instead of an individual health insurance plan. A family floater plan as the name suggests has a floating sum insured among all the insured members. Anyone of the insured could utilize the sum insured without any restrictions.
A family floater health insurance plan would be cheaper compared to an individual sum insured health plan as in an individual plan each individual would have separate sum insured which could only be utilized by that individual whereas in case of floater plan one sum insured could be utilized by any individual under the plan.
A family floater option could be up to 4X times cheaper than an individual health insurance plan and therefore it would be beneficial to opt for a family floater plan to reduce the premium.
- Opt for deductibles: Deductible or excess is the amount that has to be borne by the insured in case of a claim. Basically the insured would act as the insurer for a certain amount of claim. For example, if the deductible amount is Rs.5000, then any claim up to this amount has to be borne by the insured and any amount above this deductible amount would be settled by the insurance company.
In case of a claim, before the insurance company settles the amount, the deductible has to be paid by the insured. Higher the deductible, higher would be the discount available in a health insurance plan. It is important to note that one should maintain balance between the deductible amount and the premium payable as higher deductible would decrease the premium outgo but increase the share of the insured in case of claim settlement.
- Buy Long term Plans: The other way to reduce your health insurance premiums is to buy long term plans. Long term plans are those that have a longer term i.e. 2 or 3 years. Insurance companies would be willing to provide discounts for long term plans. Most of the health insurance companies offer 5-10% discount for long term health insurance plans.
Long term plans would benefit both parties as you would save yourself from premium inflation which is happening every year and on the other hand insurance companies would receive funds in advance that could be invested elsewhere.
- Avail Wellness Points: One important and basic thing everyone forgets is that insurance companies are offering wellness points for maintaining your health. These wellness points could in turn be used to avail discounts in health insurance premiums. Wellness points are a part of the wellness programs offered by the insurance companies.
Wellness points can be accumulated by walking a fixed number of steps every day/year, exercising, undergoing regular check-ups etc. A considerable portion of premium could be reduced depending on the number of wellness points available. Wellness programs would again be beneficial to both parties as you could be healthy and reduce the probability of falling sick which in turn would reduce the claim ratio of insurance companies.
- Use No Claim Bonus: No claim bonus is the benefit offered to the insured policyholder for not making a claim during the policy period. No claim bonus is usually referred to as cumulative bonus in health insurance. The reason for this is health insurance bonus is offered in the form of extra sum insured unlike motor insurance where it is offered in the form of reduction of premium.
In a health insurance policy, every claim free year will result in extra sum insured which is why it is known as cumulative bonus as the sum insured would get added every claim free year. The no claim bonus usually starts at 5% and can go up to 100% of the base sum insured for every claim free year. So if there are no claims in a particular year, your overall sum insured would be increased without paying any extra amount. Effectively your premium is decreasing for the actual sum insured.
- Preventive Health Care: The other least explored option to reduce health insurance premiums by most policyholders is to undergo preventive health checkups. Preventive health checkups can either be undergone at your own expense or at the expense of the insurance company.
Your health insurance policy would come with an annual free health checkup and the number of tests under the free checkup depends on your sum insured. Higher sum insured would have more tests and vice versa. To conclude, by undergoing preventive health checkups and maintaining preventive health care one can reduce their health insurance premiums as the premium depends on the health condition of the insured.
- Opt for Super Top-up: Health insurance is costly. But, not for people who take super top-up. A super top up health insurance is a complementary plan that works alongside a base health insurance plan. For example, if your health insurance requirement is Rs. 20 lakhs and you may fear that there could be instances where this sum insured might not be enough and you want to opt for a higher sum insured, but it is expensive. The premium for a super top up policy would be at least 10X lower than that of a regular health insurance plan.
In such cases you may choose to purchase a top-up health insurance plan for any sum insured of your requirement and select the deductible amount to be less than your base sum insured. For example, if your base sum insured is Rs.20 Lakhs, you may choose to take a top-up plan for Rs.1 Crore with a deductible limit of Rs.20 Lakhs. This way any expense below Rs.20 Lakhs would be taken care of by your base policy and any expense exceeding Rs.20 Lakhs would be taken care of by the topup policy.
FAQs:
1. Will my premium increase if there is a break in the policy continuation?
Maybe. If there’s a break in the policy continuation, your health insurance premium might increase. This is due to the fact that the underwriting process would start afresh and the premium depends on the risk of the proposal.
2. How many types of deductibles are there in health insurance?
There are two types of deductibles in a health insurance policy. One is voluntary deductible and the other is compulsory deductible. Compulsory deductible is applicable for every policy whereas voluntary Deductible depends on the wish of the policyholder.
3. How many people can join in a family floater policy?
The maximum limit in a family floater policy is up to 7 and this could be increased subject to underwriting.
4. How much discount is given for long term plans?
Long term plans offering a discount of 5-10%.
5. What is no claim bonus?
No claim bonus is a benefit offered to the policyholder if there is no reported claim during the previous policy period.
