Friday, July 12, 2024

Health Insurance: Soon You Can Pay Your Premiums on Monthly Basis

Are you delaying purchasing a health insurance cover as you find the annual premium too high to be paid in a lump sum? Or are you planning to buy a health insurance plan with a lower sum insured to ensure that the premium fits into your pocket? Don’t worry, soon you may be able to buy a health insurance policy of your choice without worrying about paying the premium as a lump sum amount. You will now have the option of paying your health insurance premium in not just annual, but monthly installments as well. Amidst the ongoing COVID-19 outbreak, the Insurance Regulatory and Development Authority of India (IRDAI) has come out with a circular for minor modifications in policies filed by general and standalone health insurers. As per the circular, the regulator has allowed the payment of health insurance premiums in installments. However, each insurer holds the prerogative to decide whether or not to offer this facility to the consumers. The plans with monthly installment premium payment options will go live on prominent online insurance market place – PolicyBazaar.com’s website from 5th June 2020.  

Great Relief for Common Man Amidst COVID-19

Amit Chhabra, Health Business Head, Policybazaar.com Said The premium mode (frequency) can be monthly, quarterly or half-yearly as per decided by the insurer. Hence, from here on, instead of paying an annual premium of for instance Rs. 15,000 as a lump sum, you will now have the choice of making the payment in equal installments over regular intervals in a year. With the total number of COVID-19 positive cases nearing 2 lakh mark in India, having a comprehensive health insurance plan is crucial at the time of the virus outbreak. Moreover, considering the financial stress due to job losses, sales dip, and pay cuts that most salaried professionals and businessmen are facing all across the nation, the regulator’s decision of allowing the option of paying premium through easy installments is being seen as a great relief for the common man. The recent guidelines shared by IRDAI on minor modifications will definitely help in increasing the health insurance penetration rate and distribution of insurance products in India. However, as a customer, it is important for you to know that in the case of installment mode, the periodicity needs to be chosen at the time of buying the policy and could not be easily changed thereafter.

Smaller Premiums Will Increase Affordability

Say, for instance, the family floater health insurance policy that you want to buy for your family that covers you, your wife and your 2 kids is costing you Rs. 24,000 annually for Rs. 10 lakh sum insured. In such a scenario, you may ask your insurer to change the frequency of the premium payment and by opting monthly mode frequency, where you will now have to pay Rs 2,000 per month for the next twelve months (12*2,000 =24,000). Now, paying Rs. 2,000 per month is much more affordable than paying 24,000 in just one month as a lump sum for most middle-class Indian families with limited family income. The monthly premium payment option can prove to be beneficial for senior citizens as well because the premium of senior citizen health plans is considerably high and giving them the option of paying the premium every month can be very useful and bring maximum people under the insurance umbrella.

However, the ease of paying a premium in monthly or any frequency opted by you is right now limited for a period of 1 year only. After this, the normal frequency will get restored. However, the tenure of the installment will depend on the insurer whether they may decide to offer forever or 1 year. The monthly payment policy for existing policyholders is subject to the tech preparedness of the insurers. Those who have a running policy can change the option to pay using monthly or quarterly mode at the time of renewal of the policy.

Payment of Claims in Monthly Instalments Premium

If you choose the monthly payment mode for paying the premium of your health insurance cover and after paying just 3 or 4 installments, you need to file for a claim, under such a scenario, the insurer will be liable to process your claim. However, you will have to either pay the remaining premium in one go to the insurer or the insurer may deduct the remaining premium from the total claim amount payable. The installment-based premiums will not impact the claim settlement process provided you either pay the remaining premium upfront or the balance premium would get deducted from the claim amount by the insurer.

For instance, say the annual premium of your health insurance policy is Rs. 24,000 and you have chosen a monthly installment-based premium payment process under which you have paid 4 installments of Rs. 2,000 each amounting to a total of Rs. 8,000. Now, in the middle of the policy term if you file a claim for say Rs. 1,40,000, in such a scenario, you either have to first pay the remaining Rs. 16,000 of your insurance premium to the insurer to process the full claim amount or the insurer will deduct the remaining Rs. 16,000 from your claim amount and will process a claim amounting to Rs. 1,24,000. (1,40,000 – 16,000).

No Major Change in Insurance Premiums

With the regulator allowing insurers to collect premiums on a monthly, quarterly, or half-yearly basis along with annual collection, there is no major change expected in the basic premium of the health insurance plans. However, as allowed by the regulator, the insurers are allowed to marginally increase the total premium if the policyholder opts for quarterly or monthly premium payment options in place of the annual premium payment option. The increase in premium may vary on a plan to plan and insurer to basis and the effective increase will be completely fair and reasonable.

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