The Buyt Desk
After the pandemic, we have become more aware of our health, keeping it right, and at the same time, prepared for emergencies. All these factors have surged the demand for health insurance policies lately.
Recent data shows a sharp increase in the graph of health insurance buyers, and most have tilted toward policies that provide higher cover, i.e., above 10 lakh to 1 crore. Whilst a health insurance policy with high coverage is a saver, the premium cost makes it difficult for buyers to stay with it. High cover means higher premiums, which often does not work with many. The instalment option to pay the premium is pocket friendly. But should you consider that?
Check the pros and cons of paying health insurance premiums in instalments.
Option for Paying Health Insurance Premium in Instalments
To meet the requirements of end users, the IRDA (Insurance Regulatory Development Authority of India) has allowed insurance companies to accept health policy premiums in instalments.
But what made IRDA take a huge step? The answer lies in this number. In 2014-15 approximately 1,09,00,000 health insurance policies were sold, which provided coverage to nearly 28.08 Crore people. The data also revealed that the contribution of individual health insurance in this figure is low. With this move, IRDA wants to make individual health insurance products affordable for buyers.
Let’s unravel the benefits you will get by paying insurance premiums in instalments.
As this move has been taken by IRDA, it connects to people and has got many pros.
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People in small cities and villages do not take health insurance because of the affordability issue. In a health insurance policy, an individual pays in a lump sum. The option to pay the premium in instalments will make it accessible to them.
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The people in urban areas are no different from small city people when it comes to affordability. Moreover, they are at a higher risk of hitting an emergency than their counterparts. Premium payment in instalments would make health insurance within their budget.
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With the Premium payment in instalments option, people can choose health insurance policies that provide higher coverage.
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The option has increased the product range for buyers. They can also consider upgrading the policy according to the need or adding riders.
What are the Downsides of Paying Premiums of Health Insurance Policy in Instalments
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For paying the premium in instalments, the policyholder might have to pay some charges, which might sound nominal, but overall, it adds cost. E.g., we pay interest to buy a mobile or car on EMI.
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Under this option, one has to choose the policy which would have 2 to 3 years of the policy term.
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If the insurance company add a clause that policyholders cannot claim insurance until they pay a minimum of one-year premium then it would be a problem.
