One should carefully evaluate the policy requirements, including the sum insured and coverage, for a longer time horizon, as changes to these may not be possible for the entire duration of the policy
Health insurance policies need to be reviewed annually. However, you may also have an option of buying health insurance policies for up to three years, thus there is no need to renew a long-term health insurance policy, minimizing the risk of inadvertently missing renewal dates and losing coverage.
Long-term health insurance policies can be given stability in premium for the duration of the policy. It gives a hedge against any increase due to rate revision at the time of renewal, as in the case of annual policies.
The Benefits Of Long-Term Health Insurance Policies
“Due to the long-term nature of the policy, there could be a discount of 10 per cent to 15 per cent on the premium rate compared to annual policies. This can result in savings in premiums achieved throughout the policy. Further, all the benefits such as cumulative bonus, can also be obtained. Policies are available for tenure of three to five years in the market currently,” says Hari Radhakrishnan, expert, Insurance Brokers Association of India (IBAI).
Long-term or multi-year policies offer limited flexibility to policyholders. Individuals aren’t able to switch plans or insurers until the policy term ends.
“Additionally, these policies offer coverage for more than one year, so over the years, the policyholder’s healthcare needs may evolve (e.g., requiring higher coverage or additional benefits), but a locked-in policy may not allow mid-term modifications,” says Siddharth Singhal, business head, health insurance, Policybazaar.com.
Before Buying Long-Term Health Insurance
“Before opting for a long-term or multi-year health insurance policy, individuals must ensure the financial feasibility, like they must compare lump-sum cost vs. installment payments and assess the actual cost savings or discounts offered,” says Singhal.
One should carefully evaluate the policy requirements, including the sum insured and coverage, for a longer time horizon, as changes to these may not be possible for the entire duration of the policy.
In case of coverage inadequacy, one may have to buy supplemental insurance, which may either be difficult, more expensive, or simply not available if there are any medical conditions. So, Singhal says that it is important to look for flexibility features wherein you can upgrade coverage mid-term or if the plan allows changes based on evolving health conditions or family coverage needs.