The IRDAI (Insurance and Regulatory Development Authority of India) keeps introducing changes to simplify and ease the insurance process for policyholders. Recently, it announced that health insurance premiums can now be paid in instalments, too. Earlier, policyholders could only pay their premiums annually. Thanks to the recent changes, they now have the option to pay their premiums on a monthly, quarterly, or half-yearly basis. While this change has received positive acclaim, it has also brought several questions to the fore, the most common one being – which option of payment would be the best?
To find the answer, we would require a detailed understanding of two major factors. Let’s go through them.
- Premium amounts
Some experts are of the opinion that there might be a marginal change in the health insurance premium amount as per the frequency of the payment, depending on the insurer. Whether you are paying on a monthly, quarterly, half-yearly, or annual basis, your premium is likely to be calculated on the previously held guidelines only. However, if you opt for monthly or quarterly payments, you may be charged a small modal fee. The change, if any, in the premium amount may also differ according to the health insurance plan. The IRDAI is willing to permit such an increase as long as there is a reasonable explanation.
Some other experts opine that there might be no increase in the premium amount and the annual premium would simply be divided depending upon the instalment mode you have chosen. So, if your annual premium is Rs 24,000, your half-yearly premium may be Rs 12,000, the quarterly premium amount may be Rs 6,000, and monthly Rs 2,000.
- Claim raising and settlement
Since you will be paying premiums more frequently and in lesser amounts, the question of your eligibility to raise claims arises. If your health insurance policy has recently turned active, and you have paid only a few monthly premiums, are you eligible to raise a claim on the sum insured after those few months only? Yes, according to most experts. The insurer is liable to process your claim even if you may not have paid the entire premium for the year. There may be certain conditions to be met though. Let’s try to understand this with an example where your annual premium is Rs 12,000. You have paid Rs 1,000 each for five months and require medical help in the sixth month so you raise a claim of Rs 40,000 on your health insurance. Now, the insurer will process your claim but may deduct the remaining premium amount – Rs 6,000 – from the claim payable. So, you would receive Rs 34,000. Or you may be asked to pay the remaining premium upfront and get the entire claim amount.
It is to be borne in mind that these are conjectures made by industry experts. The process of claim settlement may differ from insurer to insurer with the consideration of several factors. So, make sure that you are aware of the claim process that would accompany the premium instalment method you choose.
Lesser compromise on coverage
Overall, opting especially for monthly or quarterly instalments may be beneficial to many people. Earlier, people would compromise on their Mediclaim policy coverage as they could not afford the high annual premiums that were to be paid in a lump sum amount. Now, with less costly monthly payments, policyholders can opt for more comprehensive coverage. Depending on your monthly budgets, coverage requirements, and the above information, you may make a decision that suits you well.
It is important for us to remember that this announcement is fairly new and not a mandatory one. There is a strong probability that your insurer may not yet provide the instalment facility. Underwriters may also have to consider several new factors when evaluating and structuring health insurance plans.
The best option for you would be to have a discussion with your health insurance agent and ask them questions regarding premium payment in instalments. Professional advice may help you in making the decision in a much better way. Good luck!