All that you need to know about long-term health insurance

Published Nov 23, 2015, 10:45 am IST
Updated Mar 27, 2019, 12:25 am IST
Health Insurance
 Health Insurance

Timely renewal of insurance is something many of us forget. Delay in making premium payments is often the culprit. The result is that you miss the coverage, and are likely to spend money from your pocket in case of a claim during the period. You also forfeit your chance of claiming the No Claim Bonus (NCB) that can considerably decrease your premium during policy renewal. In addition to insurance seekers, insurance companies are also worried over the renewals of small ticket insurance products, especially due to its increasing numbers.

Long-term general insurances in India
The chairperson of the Insurance Regulatory and Development Authority of India (IRDAI) revealed that the regulatory body is working on the details of long-term health insurance. This follows the successful feedback received for the long-term two-wheeler insurances launched last year.

What is long-term health insurance?
Long-term health insurance plans have a tenure of two to three years. So, instead of buying a health insurance plan that is valid for 12 months, you can lock up your coverage for 2-3 years. The long-term health insurance plan will be an alternative to the regular one-year health insurance policies that will continue to be available.

Why are such long-term plans significant?
In recent times, there is an increasing awareness among Indians of the need for health insurance. The spiraling health costs and the promotion of health insurance by the government as well as insurance companies are convincing more and more people are to consider health insurance as a must-have. The revised tax rebates on health insurance are also promoting the product. However, more insurees mean more paperwork for the insurance companies. This, together with the rising medical costs, is forcing health insurance companies to increase the premiums of health insurance plans. While insurance companies are helpless about the increasing medical costs, they can reduce their costs by reducing the paperwork and can pass on these benefits to their customers. Long-term health insurances can help them achieve this.

Why should you consider such a plan?
The one big advantage for you, as an insurance seeker, when you opt for a long-term health insurance plan, is that you will no longer have to renew your plan every year.
Long-term health insurance plans are also likely to come with a discounted premium as compared with one-year health insurance plans. Also, when you lock your insurance plan for three years, you make yourself immune to rate revisions of premiums that are likely to happen during the period. Insurance companies are likely to work out and offer discounts for NCB (no-claim bonus) to long-term health insurance policyholders. As NCB slabs are fixed by the IRDA, the benefits can be in the form of claim-related concessions, such as offering a bonus if two out of three years are claim-free.

Will this plan be available for senior citizens?
Senior citizens are usually considered high-risk by health insurance companies. Therefore, long-term plans may not be offered to senior citizens. However, more details will emerge only after IRDAI approves such plans, hopefully sometime soon in the near future. Putting a price on future health care costs is a tough challenge for insurance companies. As health costs increase every year, insurance companies will have to underwrite long-term insurance policies after considering the possible cost increases in between the term. For this reason, plans beyond 2-3 years are unlikely.

What about pre-existing diseases?

Long-term health insurance policies are likely to cover pre-existing diseases with a waiting or cool-off period as per the usual norms. For example, assume your policy has a three-year cool-off period and you have already completed a two-year waiting period for your health insurance. If you now take a long-term policy during the third year, you can start claiming for expenses incurred against pre-existing diseases starting from the fourth year as per your policy terms.



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