Save more than 5%, buy a two-year health plan
Several health insurance companies have introduced two-year medical insurance policies. By paying two years premia at once, you can save 5-7% than renewing a one-year policy.
Have you been looking at buying a fresh health insurance policy or renewing your existing policy? When you next call your general insurance advisor ask specifically about two-year health insurance plans. Chances are you will benefit on more than just the premium front.
The premium is lower by 5-8% for a person buying a two-year plan. Apollo Munich Health Insurance offers a 7.5% discount on a two-year policy premium. So the one-year premium for a Rs5 lakh cover for a 36 to 44-year-old is Rs7,185 with taxes, while a two-year premia is Rs13,293, which is Rs1,077 lower than the two-year premium. This saving is higher than the 7.5% quoted.
Similarly, Star Health and Allied’s Medi Classic Insurance for the same sum assured and age group is Rs6,145 annually and Rs11,676 for two years, which converts to a discount of 5.25%.
HDFC ERGO General Insurance Company’s Health Suraksha too helps one save Rs1,247 as the premium for a Rs4-lakh policy of a person between 36 and 45 years is Rs6,233 annually, while that for a two-year policy is Rs11,219.
But why this discount, you may ask? Sudhir Sarnobat, MD of Medimanage Insurance Brokers, says, “They offer a discount, equivalent to the interest income the money would have earned. If one pays the two-year premium upfront, the premium is about 5% lower. This is to lure customers into a longer-term commitment.”
Of course, you could get better returns at 8.5% or more for your money if you invested it wisely. But then at a time when insurers are cutting down benefits and changing policy terms frequently it is better to opt for a two-year policy.
Also, the policy conditions will be same for the two-year policy period.
“Technically the insurer can change the policy terms for all insured members. But usually the practice is that underwriting changes are made only at the time of renewal. So one who buys a two-year policy is protected against underwriting changes for a year longer,” Sarnobat adds.
But two years down the line, don’t forget to renew your health insurance policy as you would lose benefits such as culmination of waiting period and no claims bonus if there is a gap between renewal and expiry.