Will Long-term Health Insurance Improve The Current Health Care System

Health care expenses are rising, thus, prompting the increasing need to buy health insurance. These days, an increasing number of people are choosing to opt for long-term health insurance policy keeping in mind the rising costs of hospitalization in addition to the lump sum amount that gets spent on availing assisted medical treatment options at one’s own place. These days, an increasing number of people are now opting for health insurance plans with an increased policy period. These plans, also called long-term health insurance policies, have a tenure ranging from two to three years. In addition to seeking relief from renewing the policy each year, policyholders gain the advantage of remaining covered for a longer period.

Understanding Long-Term Health Insurance

Just like long-term motor insurance plans, the Insurance Regulatory Development Authority of India (IRDAI) is contemplating to introduce the concept of long-term health insurance policy. These plans come with a tenure of 2-3 years and are now being looked as long-term alternatives to the currently available health insurance policies that are limited to a year only.

How Would Long-Term Health Insurance Benefit?

Policyholders who would opt for long-term health insurance in the future would be spared the added strain of renewing their policies each year. Since customers would be opting for long-term plans, insurance companies in India will consider the idea of selling the plans at discounted rates to their customers.

Also, buying insurance plans for prolonged periods ensures that the customers will be required to pay a fixed amount of premium determined while buying the policy. This keeps the customers secure from the sudden increase in premium rates every year. The discounts associated with No Claim Bonus (NCB) are other added benefits associated with buying of long-term health insurance plans. Customers would be entitled to claim-related concessions in consideration of the NCB slabs fixed by the IRDAI.

Would Long-Term Health Insurance Help?

After the IRDAI regulated the issuance of long-term motor insurance policies, customers are now looking forward to the insurers selling long-term health insurance plans too. As hospitalization costs continue to rise and people are spending on medical treatment, the need for health insurance has become more pervasive. Lower renewal rates mean a lesser amount of paperwork for the insurance companies concerned, thus, saving on unnecessary costs and the time spent on choosing a new policy or renewing the old one. The amount that the insurers save on recurring policy renewals gets passed on to their customers as additional financial benefits.

What About Waiting Period Against Pre-existing Disorders?

Many customers ask if the waiting period clause would be affected by buying long-term health insurance plans. However, it is important to understand that the concept of the cool-off period or waiting period clause for certain pre-existing illnesses would remain unchanged. This can be understood with the help of an example.

A customer had bought health insurance that mandates a three-year waiting period for certain pre-existing diseases and had continued with the policy for two years. If the customer chooses to buy a long-term health insurance plan with the same waiting period during the third year, then he or she can start claiming hospitalization expenses and amount spent on treatment of the pre-existing disorders from the fourth year itself. This means that the customers would not have to go through the entire waiting period cycle to avail the benefits of buying health insurance.

Do These Plans Benefit Senior Citizens Too?

Customers buy health insurance not only to keep themselves covered but to secure their loved ones too. The dependents may be aged parents. These senior citizen guardians are at a greater risk of falling ill than other members of the family. Owing to the increased risks of hospitalization and medical treatment involved, insurance companies refrain from selling long-term health insurance policies to such customers. However, the IRDA is now considering ways that would enable senior citizen family members to be covered under the policy.