With healthcare expenses surpassing the general inflation, making a visit to the doctor for small ailments like cold or cough can burn a hole in your pocket. The situation becomes worse in the case of critical ailments for which you may require enormous financial surplus.
While most of the people understand the importance of buying health insurance, what they don’t realise is that the policy helps only if it is active at the time of hospitalization. But as per the Insurance Regulatory and Development Authority of India (IRDAI), 80.7% of all health insurance policies were renewed during the financial year 2014-15. With regard to numbers, as compared to 92.67 lakh policies pending for renewal, 74.79 lakh policies were renewed.
There were several factors behind the non-continuity of health insurance policies and affordability was one of them. To promote people to opt for Health Insurance, the govt also gives certain tax deductions for premium paid for Health Insurance Policy.
If it is the budget which is restraining you from buying the policy or keeping it active, then here are some of the tips which will help in lowering your premium outgo:
- Buy medical insurance when you are young: There are various factors which help in deciding the premium of a health insurance policy and age is one of them. When a policyholder moves to a higher age band, renewal premiums get increased. Though there is nothing that you can do to avoid this hike, if you are yet to sign up for a mediclaim, you should buy the policy as soon as possible. With the increasing age, the chances of contracting ailments also increase and so do your insurance premiums. Therefore, it is good to opt for the health insurance policy when you are young.
- Go for the right sum insured: While it is important to buy a health insurance, it is equally important to go for the right sum insured. Buying more and less than what you require — both conditions can pose serious problems. If you are over insured, then it means you are paying a higher premium but in case you are under insured, you might require paying medical bills out of your pocket due to insufficient health coverage. To avoid any of these situations, it is recommended to opt for the right sum insured under the policy on the basis of your age and health condition. Also, don’t forget to consider the impact of the inflation rate. A Rs 5 lakh coverage may look sufficient today, but it would become insufficient in five or ten years down the line.
- Opt for the voluntary co-payment: Co-payment is the portion of a claim which is to be first paid by the policyholder at the time of claim settlement. Further, co-payment can be divided as:
- Compulsory: It is an amount which is inbuilt into the product, and you can’t opt out of it. The claimant has first to pay this amount from his/her pocket and then claim the remaining from the insurer.
- Voluntary: It is the amount which is over and above the compulsory deductible. It is an optional amount which has to be decided by the policyholder at the time of buying or renewing the policy.
If you are young and healthy, you can opt for the high voluntary amount and get some discount on premium rates. As the probability of falling ill is low in the case of healthy individuals, it is a great way to get affordable premium rates. For instance, if you have opted for a co-payment of 20%, usually insurers will give you 10%-15% discount on premiums. The low premium rates would deter policyholders from approaching the insurers for small or unnecessary expenses. As the part of the premium is to be voluntarily borne by the policyholder, the chances are high that insurance companies will get lesser number of claims.
- Buy health insurance policy online: By purchasing a medical insurance policy online, you can avail 10%-20% discount on premiums. Online insurance policies are much cheaper than their offline counterparts. The most common reason is that in the virtual space, insurers do not pay commission to agents and the insurance company transfers that portion of the saving to their customers who are buying medical insurance. Further, buying the policy online is both hassle-free and convenient.
- Opt for a longer tenure: Usually, health insurance policies are required to be renewed every year. But there are some policies which offer you a policy term of 2 to 3 years. For instance, HDFC ERGO’s medical insurance offers one or two year’s policy coverage. The benefit of opting for a longer tenure is that you get a discount on the premium from 5% to 15%, depending on the insurer and the kind of health insurance plan you opt for. Further, a long policy term will offer you coverage for a longer duration at affordable rates.
- Go for family floater health insurance plans: If you include your spouse or dependent kids in your health insurance policy, you can avail a reduction in premium rates by 10% to 20%. As under family floater health insurance plans, the overall cost is divided among all insured family members; premiums are low as compared to individual health insurance policies.
- Accumulate No Claim Bonus (NCB): Most of the insurers offer no claim bonus (NCB) if there is zero claim in the previous year. Before buying the health insurance policy, do not forget to check whether the insurer offers NCB or not. You can use the NCB to get an extra coverage without paying the additional premium.
- Stay healthy and fit: It is an important factor that should be considered not only for cutting premium rates but also for your well-being. If you are a smoker, quit it today. Or, if you are obese, hit the gym. Insurance companies reward healthy people by offering them discounted premium rates.
The cost of medical insurance is one of the key aspects which cannot be overlooked, but it is also important to analyze the health insurance coverage and its key features, sub limits, value added benefits, exclusions, etc. to make a prudent decision.