Secure Your Health Insurance Premium Until Age 55 – A New Feature Explained

Health insurance comes in quite handy during medical emergencies and planned hospitalisations, especially for the ageing population. However, the increasing policy premiums may prevent many from investing in this insurance product. Keeping this in mind, some insurance providers are now offering health plans with a special feature where your premium stays the same as when you first join until you make a claim. This means you will pay lower premiums based on your younger age, which can help you save money. Let’s talk about this health insurance policy benefit in detail.

Health Insurance Premium Lock-in Benefit - How it Works

The premium lock-in feature in health insurance allows you to secure a fixed premium rate when you first purchase the policy. This means your premiums won’t increase as you age until you either reach the age of 55 or make a claim. However, once a claim is made, the insurer will adjust your premium according to your age at the time of the renewal or when the claim is processed. The following example will help you understand how it works:

Suppose you buy a health plan at the age of 30 and make your first claim at the age of 45. In this case, the policy premiums will remain the same for subsequent renewals till the age of 45. Once you make your first claim, the premium will change to that of a 45-year-old.

Key Features of the Premium Lock-in Benefit

The following are the key features of the premium lock-in benefit in health insurance:

·         Fixed premium rate: The premium you pay stays the same as when you first buy the policy and doesn’t increase as you get older. The rate is set based on your age at the time of enrolment.

·         No-claim benefit: As long as you don't file any claims, you can continue to enjoy the same premium throughout the policy until you turn 55.

·         Encourages early enrolment: The premium lock-in feature is meant to encourage younger people to get insurance at a lower rate and lock in that price for the long run.

·         Protection from premium hikes: It protects you from future premium increases that typically happen with age or medical inflation. This way, you won’t have to worry about unexpected premium hikes in the future.

Impact of Medical Inflation on Premiums with the Premium Lock-In Feature

Sometimes, insurance companies may update their pricing due to factors like medical inflation. If they do, your premium will still be based on your original age group, but it will reflect the new pricing.

Here’s an example:

Let’s say you bought a health plan at the age of 30 when the premium for the 26-30 age group was Rs 8,000 and Rs 12,000 for the 36-40 age group. Ten years later, the insurer increased premiums by 10% due to medical inflation—Rs 9,000 for the 26-30 age group and Rs 13,200 for the 36-40 age group.

However, thanks to the premium lock-in feature, you will only need to pay Rs 9,000 instead of Rs 13,200, which would be the case without the premium lock-in feature.

Should You Choose this Feature?

While lower premiums may seem appealing for long-term savings, they shouldn’t be the only factor when choosing a health plan, whether it is individual health insurance, a family floater or parents health insurance. You should also consider other important factors, such as:

·         Coverage limits: Check the maximum coverage the policy offers for various treatments and services. It is important to choose a plan that covers key medical conditions, especially those that run in your family.

·         Sub-limits: Pay attention to any sub-limits, such as restrictions on room rent, which may affect your choice of hospital.

·         Network hospitals: Check the network of healthcare providers and choose one with a wide network, including some in the vicinity.

·         Policy flexibility: Check whether the insurance can be adjusted to include additional coverage options (add-ons) as your needs change. For example, if you need more coverage for certain treatments or want to add benefits like critical illness, a flexible policy would allow you to easily make those changes.

·         Claim settlement ratio: The claim settlement ratio is the percentage of claims an insurance company successfully settles out of the total number of claims received in a given period. It is important to choose an insurer with a high claim settlement ratio to ensure reliability and smooth claim processing.

Conclusion

Locking in your health insurance policy premium until you are 55 can protect you from premium hikes for many years. This feature is especially beneficial if you are young and healthy, as it allows you to secure affordable rates for health insurance. However, it is important to review other aspects of the policy as well, such as coverage limits, add-ons and how the insurance company handles claims, to ensure that the plan continues to meet your healthcare needs as they change over time.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

Disclaimer: This article is published in association with HDFC Ergo and not created by TNM Editorial.