Health insurance cover for five years: Here's what you should know about multi-year plans

Multi-year health policies 'lock in' premiums over 3-5 years, insulating you against premium hikes,

Imagine securing your health insurance for up to five years straight, without having to worry about annual renewals or rising premiums.

With the recent change in the Insurance Regulatory and Development Authority of India (IRDAI) guidelines, you can do this seamlessly now. Available for up to three years until recently, multi-year plans in health insurance now extend for up to 5 years. Amid rising healthcare costs, it’s crucial to stay covered at all times – which means not just having a policy but also duly maintaining it. Longer multi-year policies just make the process simpler and more affordable.

The savings (discount on premiums for multi-year policies) run as high as 17-18 percent with multi-year policies. For instance, say, a 30-year-old living in Delhi with a sum insured of 10 lakh pays an annual premium of approximately Rs 9,000. If he chooses the multi-year option, he will be required to pay only about Rs 24,000 for a three-year policy and 38,000 for a five-year policy. While the person stands to save about 12 percent in a three-year policy, he saves about 18-19 percent with a five-year plan.

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Here’s why they can be a cost-effective and valuable addition to your portfolio:

Locked-in premiums

One of the standout benefits of multi-year plans is locking of premiums. These policies are a cost-effective solution for those seeking to minimise recurring expenses. Locking in your premium for five years can insulate you against regular premium hikes due to inflation and escalating healthcare costs. Considering the lower risk profile, this particularly benefits younger buyers and enables them to secure affordable long-term coverage at lower premium rates.

Significant savings

While three-year plans have been popular for a while because of the kind of affordability they offer, five-year plans just make them better. Multi-year health plans can effectively offer attractive discounts reaching up to 17-18 percent. This makes them an attractive solution for individuals and families aiming to minimise long-term healthcare expenses without compromising on coverage.

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Hassle-free renewals

Maintaining your policy and its validity at all times is of utmost importance. If anything causes you to miss out on your premium payments in the future, and if that also happens to be the time you need to file a claim, then the situation could escalate. Especially for NRI customers and frequent travellers, renewals might get missed, even after the grace period. Multi-year plans reduce this hassle, ensuring uninterrupted coverage without the need to worry about annual policy renewals.

Tax benefits

Multi-year policyholders can claim tax benefits under Section 80D of the Income Tax Act, as in the case of a one-year policy. The premium paid to buy a multi-year policy is deductible every year but proportionately. This means you can earn tax deductions on a proportionate amount of the total premium every year.

However, beyond these benefits, multi-year health insurance policies also offer flexible payment options, including EMI facilities for premium payments. Additionally, the no-claim bonus also gets accumulated for every claim-free year. These make multi-year plans even more appealing to the consumer.

Factors to consider

Here are a few factors to consider if you are evaluating your options:

Frequency of payment: Decide whether to pay premiums in a lump sum or opt for EMI payments or monthly/quarterly mode.

Adequate coverage: Ensure the policy offers comprehensive benefits, including day-care procedures, hospital cash benefits, and critical illness cover.

Future premium adjustments: Understand how premiums may change after the multi-year term ends.

Add-ons and riders: Customise the policy with suitable riders and add-ons for enhanced protection.

Ease of claims: Opt for insurers with high claim settlement ratios and efficient claims processes.

A multi-year health insurance policy is a simple but strategic investment in long-term healthcare security. As healthcare costs continue to rise, these plans emerge as a reliable and cost-effective solution. For those seeking uninterrupted coverage, multi-year health insurance is undoubtedly a step in the right direction.