Health Insurance Premium Could Rise Further. Here's What You Can Do

If you have received intimation of a rise in your health insurance premium, you are not alone. If you haven't received one yet, you might soon enough. Rising medical inflation and claim settlements are forcing industry players to hike health insurance premiums.

Of the personal health insurance policy owners surveyed by Local Circles earlier this year, 52% said that their premium has already increased by over 25% in last one year. Out of 18,067 who responded to the survey, 27% stated that it has increased by 0-25% in the last one year, while 14% of respondents said they saw no increase. The balance did not have a clear answer.

Going ahead, most companies are going to hike premiums in the next few months, according to Nikhil Jha, founder at Hercules Insurance Advisors, who expects the hikes to be in the range of anywhere between 5-18%.

Major policies such as Niva Bupa's Reassure 2.0 is also increasing premium, along with Care Supreme Health Insurance or Star Health's Family Health Optima Insurance Plan having seen a rise in premium in the past year, Jha said. Some, such as Star, have seen fairly sharp spikes to the tune of almost 60-70%, he added.

Amit Chhabra, chief business officer at Policybazaar, said that while premiums are on the rise, it is business-as-usual. Post Covid, companies are having to play catch up and increase premiums. So while we have seen a couple of years of straight increase in premiums, on a CAGR basis it is still not as much.

On the other hand, medical inflation is rising by almost 15% per annum, along with rising instances of several health issues.

One solution can be to buy a multi-year policy, where premium, for say, five years, can be paid upfront, Jha said.

A multi-year health insurance policy is a type of plan that provides coverage for an extended duration, typically two to five years, instead of the standard one-year term. Buying a multi-year mediclaim plan also allows you to take advantage of the long-term policy discount, according to HDFC Ergo. Most health insurance companies in India offer a health insurance discount of up to 10% on opting for a policy tenure of two years. 

Along with longer term policies, Chhabra said that some health insurance companies also offer policies that lock in premiums. In case of such policies, if the insuree has not made any claims, then the company calculates premium from the entry age, he explained. As such, the policy can prove to be beneficial for youngsters.

The disadvantage with longer term policies is, if the company changes terms and conditions, the policy holder is left with limited choice even if they want to exit, said Jha. When purchasing multi-year health insurance coverage, the calculation process of the No Claim Bonus can also be a bit tricky, according to a note by HDFC Ergo.