How Can Seniors Balance Insurance Coverage And Affordability For Maximum Protection?

The rising cost of medical services can easily derail a person’s financial planning, and savings can go for a toss. A single medical emergency can mean a huge financial strain, yet health insurance penetration remains low in India. According to a government press release in May 2021, general insurance penetration in India is 1 per cent of GDP, which is significantly lower than the global average of 4.2 per cent in 2023. While health insurance policies can provide the necessary protection, their premiums also increase with a person’s age. In such situations, many seniors choose not to continue their policies after retirement.

However, stopping the policy or not taking coverage at all after group health insurance ends may not be a viable solution. Instead, seniors can explore options for affordable premiums or adjust their coverage. But, the questions are: how they can do it, what could be an adequate coverage, and what they should consider. Let us explore.

What Is Adequate Coverage For Seniors?

Pankaj Verma, Chief Technical Officer (Products & Underwriting), Zurich Kotak General Insurance Company (India) Limited, says, “Seniors should first evaluate their current health status, history of illnesses, and potential hereditary risks. They should also account for significant inflation in healthcare costs. A minimum coverage of Rs 5–10 lakhs is generally advisable, depending on the city of residence (metro vs. non-metro) and lifestyle. In metros, higher coverage is preferred due to expensive hospitalisation and treatment costs. In addition, with an adequate base sum insured, seniors can also opt for top-up policies with deductibles. For example, a base cover plus a higher top-up of Rs 25–50 lakhs can provide extensive protection at affordable premiums.”

According to G. Srinivasan, MD & CEO, Galaxy Health Insurance, a minimum coverage of Rs 10-15 lakh can cover major surgeries, such as bypass surgery, knee replacement, or critical treatment like cancer.

Notably, there is no standard amount of coverage that is suitable for everyone; it depends on one’s health, lifestyle, and family health history. But once this requirement is clear, then the senior can explore ways to optimise the premium for better coverage. This becomes even more vital as insurance premiums are a heavy and recurring cost which many seniors—who are not pensioners or lack an adequate cash-flow—cannot afford.

What Should Seniors Do To Make The Premium Affordable Without Compromising The Coverage?

Insurers charge higher premiums as a person ages. That’s why, even if a person does not suffer any ailment and has not made any claim, the premium will still increase with growing age. In that case, seniors can look for ways like opting for a co-pay, deductible, etc., to lower their premiums.

Srinivasan suggests, “Opting for a plan with a deductible or higher co-payment or can considerably lower the premium. If the insured person is generally healthy and expects to have minimal or no claims during the policy period, opting for a higher co-pay can lead to substantial savings on premiums. In addition to it, top-up plans are excellent for providing a high sum insured at a low cost. They kick in after a certain deductible amount (paid by a base policy or out of pocket) has been exhausted.”

Many insurers also offer reward points for staying fit that can lead to a discounted premium upon renewal, he adds.

Verma shares a crucial piece of advice, saying that seniors should carefully choose essential riders instead of selecting all add-ons to reduce premiums. Besides, they should regularly review and adjust coverage instead of over-insuring. “They can also use government-backed schemes, like Ayushman Bharat, alongside private insurance”, he says. 

Should Seniors Buy A Single Coverage Plan Or A Family Floater Policy Covering The Spouse?

While floater plans may work well for younger policyholders, experts suggest separate plans for seniors because if the entire sum insured is used in a medical condition of one partner, the other partner is left without coverage for that year.

However, if separate policies seem too expensive to a senior, Verma says, “if the couple is healthy and premiums are a concern, a floater with a higher coverage amount can be considered.”

What Should Seniors Consider When Choosing Between Different Insurance Plans For Health Coverage?

While creating a balance between the premium and coverage, seniors have to compare different insurance policies, and that could be confusing. So, Srinivasan suggests seven factors a person should pay attention to while selecting the best policy.

Coverage Amount: Ensure an adequate sum to cover potential medical expenses

Sub-limits: Be aware of sub-limits on room rent, specific procedures, or diseases, as these can affect the claim amount

Co-Payment Clause: Evaluate the affordability of the co-pay percentage because the policyholder will have to bear this expense for each claim

Waiting Periods: Check waiting period for pre-existing medical conditions and specific diseases

Exclusions: Carefully check the list of permanent and temporary exclusions

Wellness Benefits: Consider the value of the wellness program offered, especially if you plan to be proactive about your health

Optional Covers: Check for any other suitable optional covers

Health premiums are costly for seniors, but there are ways to work out and reduce the premiums, and in case of health matters, it is better to be proactive instead of reactive.