Health Insurance 269 views May 28, 2021

How to Pay Health Insurance Premium in Installments?

With the onset of the COVID-19 pandemic and considering the rising healthcare costs, more people are purchasing health insurance plans to protect their finances in a medical emergency. Health insurers provide coverage against hospitalization and other expenses incurred during treatment to people who have a health insurance plan.

To get the benefit of a health insurance plan, policyholders pay a premium amount. Earlier, health insurance companies allowed policyholders to pay the premium as a one-time lump sum for one year or more than one year. Due to this fact, some people find it hard to enjoy the benefits of health insurance. In September 2019, the Insurance Regulatory and Development Authority of India (IRDAI) introduced the concept of health insurance installment premium so that policyholders can get comprehensive and higher coverage without any financial hardships.

Want to know more about the health insurance premium in installments? In this article, we will discuss the same along with the effect on the premium amount when paid in installments. Let’s start!

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Concept of Health Insurance Premium in Installments

For some individuals, it was difficult to pay the premium in one installment to get coverage with a health insurance plan. That’s why IRDAI allowed the policyholders to pay the premium in different frequencies of monthly, quarterly, and half-yearly same as life insurance policies.

For example, if a policyholder chooses the monthly frequency for the 1-year health insurance plan, he/she will need to pay 12 installments in a year. Similarly, for quarterly and half-yearly, he/she will pay four installments (every three months) and two installments (every six months) in a year, respectively.

An individual can choose the premium payment frequency when purchasing or renewing a health insurance policy. Do remember that you can not change the chosen frequency during the tenure.

Impact on Health Insurance Premium when You Pay in Installments

With the installment facility, you can pay the premium of your health insurance plan without putting any stress on your finances. Suppose your annual premium is INR 24,000. On choosing the monthly frequency, you will need to pay INR 2,000 (24,000/12) per month.

However, premium payment in installments may also impact your claim amount. Suppose you have paid five monthly premiums of INR 2,000 amounting to INR 10,000. Now, at this point, if you face a medical emergency with an overall claim of INR 80,000, you would need to decide between the following two situations.

  1. Either pay the remaining premium of INR 14,000 (24,000 – 10,000) to get the total claim, or
  2. The outstanding premium will get deducted from the overall claim amount, and you will get the claim of INR 66,000 (80,000 – 14,000).

Note: The insurers may increase the premium on choosing the monthly and quarterly frequency in place of the annual payment. However, this may vary from one plan to another plan and will depend on the insurer. 

Respite to Health Insurance Policyholders During COVID-19 Pandemic

Considering the financial hardships faced by individuals during the pandemic, IRDAI issued another circular in April 2020. This circular directed insurers to immediately allow all policyholders (whose policies were up for renewal between April 2020 and March 31, 2021) the facility of health insurance premium in installments.

This circular from IRDAI provided relief to those policyholders who were struggling during the pandemic and who were unable to pay the premium in one installment. As of today, almost all leading health insurance companies provide the facility of health insurance premiums in installments at the time of purchasing or renewal.

Benefits of Paying Health Insurance Premium in Installments

We are showing some benefits of the facility of health insurance premium in installments below. Please check!

  1. With the installment facility to pay the premium amount, individuals can protect their finances from a medical emergency. The reason being it would be easier for them to pay the premium in installments as compared to a lump sum payment.
  2. Individuals can enjoy comprehensive coverage as now they can choose a health insurance plan with a higher sum insured amount due to lower monthly financial stress.
  3. The penetration of health insurance will be higher as many people found it difficult to pay the premium in one installment. Now, such people can pay the premium in installments according to their convenience.
  4. The chances of lapse in premium amount would become fewer due to the affordability of health insurance premium in installments. Without any lapse, policyholders can enjoy lifelong coverage and renewable benefits.

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