Purchasing Health Insurance At 25 Vs 40: A Costly Delay Or Practical Choice?

When it comes to health insurance, is timing everything? While a 25-year-old might dismiss it as unnecessary, a 40-year-old might wonder if it is too late to lock in a good deal. This debate, buying health insurance young versus waiting until later offers a fascinating perspective on finances, risk, and peace of mind.

Let’s unpack the reasons, risks, and benefits for each scenario to figure out what really makes sense.

Premiums and the Age Factor

The first thing anyone notices about health insurance is the premium, and this is where the age factor plays a significant role. When you purchase health insurance at 25, you are in the prime of your health. Insurance companies offer lower premiums for the young cohort.

However, it is important to note that premiums rise with age no matter if you buy early or later in life.

Explains, Siddharth Singhal, Head of Health Insurance at Policybazaar.com, an online insurance marketplace, “Insurers see younger individuals as low-risk clients.” If you were to buy health insurance at age 40 or above, the risk of chronic conditions like diabetes or cardiovascular issues increases significantly, and insurers price premiums accordingly.

This is how the average premium pricing would work for different age groups depending on coverage amount -

At age 25:

If an individual aged 25 buys health insurance, the average premium pricing would be;

- For a coverage of Rs 10 lakh plan, the premium will be approximately between Rs 7,000 - Rs 8,000 / annually.

- For a coverage of Rs 1 crore, the premium will be approximately between Rs 12,000 - Rs 18,000 / annually.

At age 40:

If an individual aged 40 buys health insurance, the average premium pricing would work something like this;

- For a coverage of Rs 10 lakh plan, the premium will be approximately between Rs 10,000 - Rs 11,000 / annually.

- For coverage of Rs 1 crore, the premium will be approximately between Rs 15,000 - Rs 25,000 / annually

At age 50:

If an individual aged 50 buys health insurance, the average premium pricing would work something like this;

- For a coverage of Rs 10 lakh plan, the premium will be approximately between Rs 16,000 - Rs 21,000 / annually.

- For a coverage of Rs 1 crore, the premium will be approximately between Rs 25,000 - Rs 35,000 and above (annually).

The differences in premium pricing vary based on plans and features offered by different insurers.

(Note: The premiums have been noted after analysing average pricing across some online insurance aggregator websites).

To correctly analyse the long-term costs of buying health insurance at different ages, one has to also account for the gradual premium increases insurers apply as policyholders move up in the age brackets. These increases are influenced by factors such as medical inflation, rising healthcare costs, and higher risks associated with age.

So what is the catch in buying early?

Buying health insurance at a younger age doesn’t just save money, it opens doors to better coverage. Insurers are more likely to offer comprehensive plans with fewer restrictions to the younger cohort.

Loading Fees and Waiting Period

At 40, however, things can get complicated. Aayush Dubey from Beshak.org explains, "By the time you hit 40, pre-existing conditions can restrict your coverage, or insurers might exclude certain illnesses altogether."

While you are in the age bracket of 40, not only have you moved into a higher age bracket, but you’re also more likely to have health concerns. The same policy might cost upwards of Rs 15,000 annually at 40, and that’s assuming you’re in good health.

For individuals with pre-existing conditions like diabetes or hypertension, premiums can spike further, thanks to risk-based "loading fees."

Moreover, health insurance policies often come with waiting periods for specific conditions, ranging from 2 to 3 years. If you buy a policy at 25, those waiting periods are behind you by the time you end up needing the coverage. At 40, you might still be waiting for your policy to cover something as basic as knee replacement surgery.

No-Claim Bonuses

One of the most overlooked benefits of early health insurance is the no-claim bonus. Every claim-free year adds to the sum insured, effectively boosting your coverage. For example, someone starting at 25 could see their coverage double by 40, without paying anything extra (for the bonuses). This is particularly useful for larger claims, where a bigger sum insured makes all the difference.

At 40, however, you’re starting from scratch. Even if you’re diligent about renewing your policy, you’ve already missed out on 15 years of potential bonuses.

Is Waiting Ever Justifiable?

Despite all the benefits of starting young, there are some situations where waiting might make sense. If you’re in your 20s and struggling financially, it might be tempting to put off buying insurance. However, this is a gamble, one that could backfire if you face a medical emergency.

Experts suggest starting with a basic policy that fits your budget and upgrading as your finances improve.

Says Ajay Shah, Head – Distribution, Care Health Insurance, “Younger individuals have a wider choice and greater flexibility in selecting plans that suit their needs and budget. Early health insurance provides peace of mind by ensuring coverage for unexpected medical expenses, contributing to overall financial security.”

He further adds, “Although starting early is advantageous, it is important to recognise that obtaining health insurance at any age, including 40 or 45 gives comprehensive coverage of high medical costs ensuring financial stability.”

When it comes to health insurance, the numbers speak for themselves. Starting at 25 offers lower premiums, better coverage, and long-term financial benefits. Waiting until 40, while still better than not buying insurance at all, comes with significantly higher costs and fewer options.