How a multi-year health insurance policy can reduce your premium outgo

Amid rising lifestyle diseases, unexpected health hazards, soaring health care costs and financial uncertainty, there is an increasing sense of health insurance awareness among millennials and Gen Z.

Many working professionals from these two segments have their group health insurance covers in place. However, such policies protect the policyholder only during his/her active employment and offer an average sum insured amount of Rs 2-5 lakh, which is relatively low considering the rising medical inflation.

Therefore, having a separate health insurance policy, be it standalone or family floater, has become a justified necessity to ensure maximum health care protection. It ensures that one is always and adequately protected.
Generally, people opt for an annual policy with yearly renewals.

However, a multi-year health insurance policy - or in other words, the facility to pay premiums for two or three years at one go - has several benefits to offer.

For one, it enables policyholders to pay the premium for the next two or three years at one go or in installments, thereby easing the hassle of renewing the policy every year and making it convenient and cost-effective.

Also read: Do not miss: Moneycontrol-SecureNow's comprehensive guide to picking the right health insurance policy 

Here are a few benefits of a multi-year plan that customers need to be aware of:

Discounted premiums: A multi-year health policy provides an additional discount on the premium rates. The discount may typically range between 5 percent and 10 percent resulting in additional savings for customers.

Lock-in benefit: A multi-year health insurance policy comes with a fixed premium for the policy tenure. This ensures that the agreed-upon premium amount will remain the same during the multi-year policy tenure, thereby protecting the policyholder from any periodical premium hikes by the insurer during this period.

Tax benefits: According to Section 80D of the Income Tax Act, a policyholder can avail of tax benefits on premiums paid for self, spouse and children for up to Rs 25,000. A multi-year policy will ensure tax benefits year on year.

Young customers can take advantage of the tax benefits and, instead of settling for a basic policy, can opt for a comprehensive policy with an adequate sum insured amount that will provide maximum coverage.

Also read: Paying health insurance premiums in installments? Know the nitty-gritties

No annual policy renewal stress: With digital policies and apps, policy renewal has become quite simple nowadays. Yet the number of people who fail to renew their policies on time every year is surprisingly high. The multi-year policy works as a one-time durable solution and eliminates periodical renewal requirements for the duration of the policy.

Continued protection: Timely renewal is mandatory for all policies to ensure continued coverage. Failing to do so can be detrimental, as it will leave the customers without any protection. With multi-year health insurance, young policyholders continue to enjoy uninterrupted insurance benefits for a longer period.

EMI benefit: Policyholders can pay the premium at their convenience and in instalments, making it pocket-friendly for the young generation.

Multi-year policies help in savings and strengthen the financial safety net early on. It is always advisable to choose a comprehensive plan with a higher sum insured for better protection. Moreover, one should also compare multiple health insurance policies and know all the terms and conditions, including exclusions, before finalising one. This will save policyholders from any last-minute surprises during a medical emergency.