Policyholders now get the option to pay the premium in installments, be it monthly, quarterly or half-yearly. Earlier health insurance premium was collected by insurers only on an annual basis.
The Insurance Regulatory and Development Authority of India (IRDAI) has come out with a circular that will allow both general and standalone health insurance companies to offer policyholders the option to pay the premium in installments, be it monthly, quarterly or half-yearly. Earlier health insurance premium was collected by insurers only on an annual basis.
IRDA has permitted health insurers to make changes as an increase in maximum premiums or decrease in minimum premiums, as well as the maximum entry age. Generally, 65 years of age has been set as the maximum age limit of health insurance policies. However, insurers can now bring in changes to that go beyond the limit of 65 years.
Anurag Rastogi, Chief Actuary and Chief Underwriting Officer, HDFC ERGO General Insurance, says, “The inflation in health care costs is high which is pushing the need and demand for high sum insured health insurance. These high sum insured products may be expensive and some buyers may find it difficult to pay the entire premium in one go. Hence, this is quite a welcome move, as it aims at easing the cash flow problems of prospective health insurance customers.”
IRDAI has also authorized insurers to put on additional distribution channels, without the regulator’s approval for specific products on a certification basis without any changes in the terms and conditions. Additionally, depending on the loss-ratio range, the premium can also be changed, increased or decreased by 15 per cent. Rastogi adds, “Introducing premium installment facility till now required separate product filing and approval from the regulator. However, the recent guideline makes it simple for insurers to offer premium installment facility to willing customers, thereby increasing the appeal and affordability of health insurance for a large population and helps them balance the need for appropriate risk coverage and cash outflow. This is also expected to push up the penetration of health insurance in the country.”
IRDAI in there circular also added, “There shall be no change in the basic premium table and charging structure under the approved individual product to which new premium payment mode (frequency) is being added. Factors applicable, if any, to allow the change of premium payment mode (frequencies) shall be fair and reasonable.”
The regulator also states that changes in the premium rates resulting in the increase should only be after the expiry of 3 years from the date it was approved or modified. There should be a gap of at least 3 years from the date of change effected, before bringing in any subsequent increase in the premium under the IRDAI guidelines.