How to Save Money on Personal Health Insurance Coverage


How to Save Money on Personal Health Insurance Coverage

Today, any minor surgery can cost you anywhere between 2-5 Lakh Rupees. Health inflation in India is rising at about 14% per annum. If you are a white-collar worker, your salary hike might have been lower than 14% per annum, especially over the last few years.

Without basic health insurance, it is increasingly difficult for middle-class people to quickly manage such a huge amount of money. But healthcare costs are just one side of the coin; the rising inflation and claims loss ratio has also influenced the personal health insurance premium. The personal health insurance premium has risen considerably over the past few years, especially since the covid pandemic. This is primarily because the loss ratio of the insurance companies has been hit due to the covid claims.

Personal Health Insurance Premiums are Costlier Compared to a Few Years Back, But One Can Save Money by Following Some Steps.

Compare and Purchase:

The first and foremost thing to do while purchasing a personal health insurance plan is to compare all the available plans. You can compare the two if you are conversant about health insurance. But if you need to be equipped with enough knowledge regarding health insurance, then it is important to talk to a health insurance expert. At the same time, online information makes you think you understand a health plan’s ins and outs, which is only sometimes the case. Additionally, it wouldn’t be possible to compare all of the health insurance options on the market.

If you have a broad idea of the coverage required, you can check the personal health insurance plans that match your requirements. Otherwise, you can take the help of an insurance broker. Insurance brokers such as Ethika insurance broking works with most insurers in the industry and can help you understand and choose the right product.

Comparison and deliberation with a Broker can help you understand and eventually save money on covers you do not need.

Buy Health Insurance When You are Young:

Getting personal health insurance when you’re younger is another way to lower the cost of the policy. It is a thumb rule in the health insurance market that the premium increases with age. The amount of the premium will increase as you age. The premium for younger people is lower because their chance of hospitalization is lower. For example, a person aged 25 can buy a health cover of Rs. 5 Lakh for around Rs. 8000, while the same cover can cost around Rs. 15,000 for a 35-year-old. Some insurance companies increase personal health insurance premiums yearly, whereas few companies follow the age slab for increasing the premiums.

Another advantage of buying a health plan when you are young is that you can cruise through the waiting periods when you are in the prime of health. Additionally, you might be eligible for a tax exemption on the sum paid for the insurance policy. These choices can help individuals reduce their medical insurance premiums.

Opt for Co-Payment/Sub Limits:

Co-payments and sub-limits are clauses that make you, the insured, share a part of the claim amount. An amount based on medical costs incurred at settlement is due from the insured. This amount could either be a percentage of the claim amount (co-payment) or a limit, after which the insurer would not bear the cost of hospitalization. Most insurers mandate co-payments/sub-limits in senior citizen health policies. However, such conditions are voluntary for policies when bought at a younger age. The best part is that Insurers tend to give discounts on opting for co-payment. If a higher co-payment is chosen, both the price and the amount will be lower. However, you should not opt for a higher co-payment to reduce the health insurance premium – this could impact you at the time of claim settlement. There is no point in saving a small amount as a premium and paying a high amount at the time of claim settlement. It is important to balance the co-payment and the premium payable under the health insurance coverage.

Go for a Top-up Plan Instead of Higher Coverage:

Top-up / Super top-up plans can help you save money on health insurance. In simple terms, Super top-up health insurance plans can be considered to have a deductible that needs to be borne by the insured before the insurer starts paying for claims. A super top-up health insurance plan supplements your current health insurance coverage.

And the best part is. Super top-up plans are cheap. Super top-up health insurance plans can be taken from the same insurance company as the basic health insurance or a different one. Depending on your requirements and base health plan, you could decide on an appropriate sum insured for your super top-up plan.

Utilize Wellness Benefits:

Most health insurance plans come with wellness benefits such as reward points for certain activities such as physical exercises, maintaining a healthy lifestyle, complementary medical checkups, etc. These wellness benefits are targeted to improve the health of the insured customer by engaging them in certain physical activities which are good for heart and health, such as walking, exercising, completing a certain number of steps, etc. When a customer completes the challenges, they will be rewarded with reward points which can be utilized to avail discount on the premium payable at the time of renewal of health insurance online or offline.

One can claim up to 75% discount on their renewal premiums using reward points from the wellness benefits. This way, the insured can save money on their health insurance premiums, and the insurance company can reduce their loss claim ratios. It is proven that people who engage in considerable physical activity are less liable to fall sick compared to people with a sedentary lifestyle. Your wellness benefit can not only help you stay fit but can also save money.

Opt for Long Term Plans:

Health insurance can now be purchased for a period of 1 to 3 years. Insurance companies tend to give higher discounts to those who buy health insurance for a period of more than 1 year. This is due to the advantage that the insurance companies get premiums in bulk and the fact that a long-term policy also reduces the chances of customers switching mid-term, thereby increasing customer retention. Customer retention is an important aspect for insurance companies because many Customers who do not get hospitalized for a couple of years tend to think that they would never get hospitalized and therefore stop paying premiums for the policies. A lapse in policy serves no one. The insurer loses premiums, and the customer loses continuity benefits.

Long-term plans can offer discounts ranging from 8% to 15%. If you are not able to afford such a high premium, insurance companies provide you with an installment premium payment option as well.

Go for Family Floater Instead of Individual Policy:

Family floater policies are those in which a single sum insured would be shared among all the family members. The sum insured would be floating among the family members, and anyone from the family can utilize the sum insured without any restrictions on the usage. In the case of individual policies, the sum insured would be restricted to a particular insured member, which another member cannot utilize. Individual sum insured would also have an option of the varying sum insured among the members, i.e., one member can have Rs.5 Lakhs sum insured, and another can have Rs.1 Lakh sum insured. The premium payable under the individual policies would be higher when compared to the family floater plans.

In Family floater plans, the entire family could utilize one sum insured instead of an individual sum insured for every member. Restoring the insured amount in case of an overdraft due to hospitalization is another advantage of family floater plans. So it is advisable to take a family floater health insurance coverage instead of individual plans to reduce the premium.

Opt for Higher no Claim Bonus Plans:

No-claim bonus is a reward given to the insured customer for not claiming in the previous policy year. The health insurance no-claim bonus will be provided as an increase in coverage amount for each year without a claim. No claim bonus is usually offered as a percentage of the sum insured under the health insurance plan. Few plans have a no-claim bonus of 10% for every claim-free year up to a maximum of 100% of the sum insured, whereas few other plans offer a no-claim bonus of 50% for every claim-free year up to a maximum of 100-150% of the sum insured. In the latter case, one can double their sum insured in 2 claim-free years, whereas in the former, one must wait 10 years to double their sum insured. The faster you are able to double your sum insured, the higher sum insured you would be having at an early stage for the same amount of premium paid.

It is critical to understand that the insured amount under the NCB will only be credited during years in which there have been no claims and that in the event of a claim during the term of the policy, the insurer will reduce the insured amount by the same percentage at which the insured amount was increased.

Cover Parents in a Separate Policy:

Most people prefer to cover their parents in one policy, in which case the entire family would be covered. But it is important to note that the health insurance premium would depend on the age of the older person in the family, and with parents in the family floater health insurance plan, there would be a sharp increase in the premium. In addition to the increase in premium, there would also be a lot of restrictions at the time of claim settlement. Insurance companies have launched separate health insurance plans for senior citizens, which are budget friendly and provide adequate health insurance coverage. Consider covering your parents in a separate health insurance plan, as it would benefit both of you in every sense.

To summarize, these steps can be followed to reduce the health insurance premium, such as opting for the long-term, covering parents in a separate policy, availing wellness benefits to discount the renewal premiums, etc. For more information on this, please book a call with our insurance subject matter expert at Ethika insurance broking.

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Susheel Agarwal

Namaste. I'm Abhinay Nedunuru, a Fellow of the Insurance Institute of India with a passion to make insurance simple and crisp. I write on insurance and investment. I have a passion for teaching and training in particular to insurance. I'm currently doing my PhD from IIM in Management.