Should you purchase multi-year medical health insurance?

A multi-year medical health insurance coverage is a long-term various to an annual well being coverage. A multi-year coverage, because the identify suggests, will offered protection for an prolonged period of two or extra years. It sometimes permits policyholders to pay the premium for the subsequent two or three years in a single go on the time of shopping for the coverage, thereby relieving them of the effort of renewing it yearly. While such insurance policies have many benefits, one should additionally know that these have some limitations as properly.

Advantages: The premium for a multi-year medical health insurance coverage stays unchanged for your complete interval of the coverage. This is especially useful since insurers revise their premium charges upwards regularly. Thus, a policyholder is protected against any subsequent premium revisions within the coverage premium made by an insurer within the subsequent couple of years.

Naval Goel, Founder and CEO of PolicyX.com, mentioned, “In current occasions, many well being insurers have elevated their coverage premium. Those who buy a multi-year coverage is not going to need to pay the revised charges for the subsequent couple of years not less than. Choosing a multi-year coverage and paying the premium for a most of three years helps you lock within the premium quantity.”

Besides, you may also get a discount on the premium when buying a multi-year policy. Pooja Yadav, chief product officer, Edelweiss General Insurance, said, “Insurers often give discounts to customers for buying multi-year premiums. The discounts may typically range between 7% and 15% and result in additional savings for the buyers.”

Goel explains this with an acceptable instance: “Take as an example the case of a 30-year-old man dwelling in Delhi who needs to purchase a well being cowl of ₹5 lakh. If he buys an annual coverage, he must pay a premium of ₹8,066 and that is certain to rise yearly. However, if he buys a three-year well being coverage, he must pay ₹21,778 in a single go, serving to him save round 11% on the premium. “

Such policies also offer tax-saving benefits wherein you can avail of the one-time premium proportionally every year (out of the two or three years) to get the benefits. Anup Bansal, chief investment officer of Scripbox, said, “Under Section 80D of the Income Tax Act, one can avail tax benefits of up to ₹25,000 on the health insurance premiums paid for self, spouse, and children. However, under a multi-year health policy, the one-time premium you pay can be proportionately split each year to avail the tax benefit for your health policy.” For occasion, if in case you have paid a premium of ₹60,000 for a multi-year coverage of three years, you may get a tax exemption of ₹20,000 yearly until the coverage lapses. Hence, it affords a twin profit: tax deduction (which might ideally not be the case if the overall premium exceeds the prescribed restrict) in addition to a reduction in the identical yr.

Disadvantages: “It is feasible that you might find yourself with a loss if you happen to have been to purchase a multi-year well being coverage after which resolve to cancel or port it after one yr,” mentioned Yadav.

Moreover, all well being insurance policies include a ready interval, and the restrictions and advantages differ relying on the insurer and the phrases and circumstances of the coverage. Some insurance policies could cowl sure ailments after two years, whereas others could cowl the identical sickness after 4 years. In such a case, switching to a different coverage can turn into cumbersome.

Also, porting is not going to assist if the insurer brings down the premium charges over the subsequent couple of years.

Who should purchase?  

Opting for a multi-year coverage is viable because it affords the comfort of staying secured for a specified variety of years with out worrying about annual renewals.

Rakesh Goyal, director, Probus Insurance dealer, mentioned that multi-year insurance policies are perfect for policyholders searching for to keep away from the effort of yearly premium funds and the chance of lacking the renewal date. Policyholders normally miss the renewal deadline and lose any advantages when they don’t renew their coverage on time and even skip the grace interval. “Suppose you’ve a medical emergency throughout this time; you’ll be unable to make any declare and need to pay out of your financial savings. Hence, such a coverage protects you and your loved ones in opposition to any medical emergency within the close to future on the similar premium quantity,” said Goyal.

On the other hand, you must also understand that as your age advances, your insurance premium also increases. So, in such a case, a multi-year policy can be beneficial here since the premium remains the same throughout the policy period irrespective of the age. Bansal said, “If you were to buy a multi-year health policy, you can avoid higher premium revisions till the coverage ends.” The coverage may be renewed once more on the revised costs after its time period expires.

Catch all of the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint.
Download The Mint News App to get Daily Market Updates.

More
Less

Subscribe to Mint Newsletters

* Enter a legitimate e mail

* Thank you for subscribing to our e-newsletter.

First article