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Consider a combination of a base policy and a super top-up policy.
Health insurance customers will face higher premiums as insurers implement hikes.
HDFC Ergo General Insurance has recently raised premiums for its flagship product, Optima Secure.
New India Assurance has also announced upcoming hikes across all its products.
The premium increases range from 4 to 15 per cent, with senior citizens likely to experience larger hikes.
Factors driving premiums up
Several factors have contributed to the rise in health insurance premiums.
The Insurance Regulatory and Development Authority of India (Irdai) has recently revised the terms and conditions of health insurance policies.
Previously, the maximum waiting period for pre-existing diseases (PEDs) was four years; Irdai has reduced it to three years.
"When the waiting period ends, claims begin to come in. Insurers expect claims to start earlier due to this change and are factoring it into their prices," says Kapil Mehta, co-founder, SecureNow.
The moratorium period, after which insurers cannot reject a claim except in cases of fraud, has also been reduced from eight years to five. "This change entails a cost for insurers," says Mahavir Chopra, founder, Beshak.org.
Earlier, health insurance products had a sub-limit on Ayush treatment. "The regulator has mandated that Ayush should be covered up to the entire sum insured," says Praveen Chaturvedi, general manager, Insurance Samadhan.
An insurer's claims experience also affects premiums. "If premiums are insufficient to cover claims and their margins come under pressure, insurers will increase their premiums," says Chopra.
Healthcare inflation is another key driver. Averaging around 12 per cent year-on-year, it significantly outpaces consumer price index (CPI)-based inflation, and leads to larger claims.
Technological advancements in healthcare, such as robotic surgery, also play a part.
"While these technologies offer benefits like reduced hospitalisation time, they come with higher costs for equipment and skilled personnel, pushing up expenses," says Chaturvedi.
How to manage rising costs
A young person planning to buy a policy with a sum insured of Rs 10 lakh but struggling to afford the premium could start with a sum insured of Rs 5 lakh. "As earnings increase, the sum insured can be raised," says Chopra.
Consider a combination of a base policy and a super top-up policy. "Buying a base policy of Rs 20 lakh can be expensive. Instead, combining a base policy of Rs 5 lakh with a top-up of Rs 15 lakh can lower the premium," says Chaturvedi.
Chopra adds that opting for such a combination can save at least 15 per cent on the premium.
Insurers offer no claim bonuses (NCBs). "By adopting a healthy lifestyle and avoiding hospitalisation, customers can avail of NCBs, increasing their sum insured without a rise in premium," says Chaturvedi.
Nowadays, insurers offer multi-year plans. "Two- or three-year plans come with discounts," says Chaturvedi.
Another option, especially relevant to senior citizens, is to buy a plan with a co-pay, which also reduces the premium, says Mehta.
A top-up plan with a small deductible, say Rs 50,000 or Rs 1 lakh, is another option.
"The insured will bear the deductible amount, and the plan will cover expenses above this level. Such plans have a lower premium," says Mehta.
Premiums should ideally not increase every year. If they do, it may indicate mismanagement by the insurer. "Consider porting to another insurer where increases don't occur annually," says Chopra.
In any case, compare premiums across insurers at regular intervals. "Insurers have different prices in various age categories. By shopping around, you could find an insurer with a lower premium for your bracket," says Mehta.
Avoid these mistakes
Younger customers often hesitate to buy health insurance due to high and rising premiums. They should nonetheless purchase coverage.
"If you can't afford the health insurance premium, how will you afford the hospital bill, which is likely to be much bigger?
"And these bills are only increasing each year," says Chopra.
New buyers should avoid settling for a low sum insured.
"Given rising healthcare costs, it's better to pay a little more and have adequate cover than to pay part of your medical expenses out of your own pocket," says Arnav Pandya, founder, Moneyeduschool.
Existing customers should also not reduce their sum insured. Rising hospital bills and the loss of continuity benefits are two key reasons.
"Various waiting periods exist: the initial 30-day waiting period, the specific disease waiting period, and the PED waiting period.
"A person who has been in a policy for three or four years would have crossed these waiting periods. If they reduce the sum insured, they risk losing these continuity benefits," says Chaturvedi.
Customers can also control their premiums by avoiding unnecessary add-ons like international coverage if they don't travel abroad frequently.
Finally, most people in India do not have adequate health insurance.
If you live in a metro city and plan to go to a category A hospital, have a sum insured of at least Rs 15 lakh per adult.
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
Feature Presentation: Ashish Narsale/Rediff.com
