In the last couple of years, a lot of developments have taken place in the medical insurance space. And there is likely to be much more action at least, in the next few months.

For one, by March-end we are likely to see portability of insurance policies. That is, policyholders can move from one insurance company to another and carry forward some of the benefits that has accrued to them over time. This will increase competition and be a big help for policyholders who are unhappy with their insurance company now.

Besides portability, a few insurance companies including a public sector insurer are planning to roll out longer-term policies. At present, a person has to purchase medical insurance policies every year. All these moves will certainly make life easier for buyers. Let's look at the advantages of a long-term medical policy:

Normally, health insurance policies are bought and sold only for one year. This implies that a policyholder has to remember the exact time for renewal in order to ensure that the cover does not lapse.

A delay can leave them without an insurance cover. Here a long-term health product will be quite handy. A policy that could be in existence for a period of 3-10 years will take away the headache of renewals. All that they need to do is to ensure that the premium is paid on time every year while the base policy will be constant over the time period.

With the headache of renewal gone, paper work will also get significantly reduced and will have to be done only once in a few years. At present, to buy a policy tests need to be done on a yearly basis, especially so if one is going for a new insurer. As a result, many people delay the process and let their policy lapse.

A longer-term policy will only require them to continue paying premiums on time to get the benefits.

When a long-term policy is in force, the premium for the entire duration of the policy will be factored in at the time of buying of the policy itself and spread over the years in the form of equal payments.

This ensures that the cost for the entire duration is known. As against this, today when there is an annual renewal then the policy holder has no way of knowing the premium that they will be paying next year. There have been situations when the premium has been increased suddenly and the policyholder has no choice but to pay the higher premium in order to continue the policy. This situation can now be avoided and this also brings an element of financial stability for the policyholder.

However, there could be certain hindrances as far as long-term policies go. For one, if the individual wants to increase the cover after a year or two due to changing circumstances, there could be a problem. Insurance companies will have factor in this when they are introducing such policies. In a yearly renewal, these matters can be handled easily.  One option, which has come up recently, could be a top up cover for the purpose of increasing the limit. This product has been introduced by general insurance companies.

On the whole, the benefits of long-term policy are far greater than the problems. This could be especially true for the youth, who may not have much health problems in their initial years.

Policyholders will be saved the trouble of yearly checkups and paperwork.

Also, instructing the bank to make regular yearly payment will ensure that premiums will be paid on time. But insurance companies will have to ensure these products are flexible in nature so as to make them attractive for long-term customers.