The IRDAI states that the premium installment facility may be offered either as a permanent feature or may be offered as a temporary relief for a period of 12 months.
Health Insurance Premium in Installments: The Insurance Regulatory and Development Authority of India (IRDAI) has relaxed the guideline that mandated a gap of at least 12 months for effecting minor modifications in a health insurance policy. As a consequence of that relaxation, the IRDAI has also asked insurers to start offering the facility of premium payment in installments by the policyholders. It has said that the premium installment facility may be offered either as a permanent feature or as a temporary relief for a period of 12 months (one policy year) in respect of all the health insurance policies that are due for renewal up to 31st March 2021.
“When it comes to customer satisfaction, IRDAI makes sure to always stand with the customers. In yet another move to think about the welfare of its customers, the IRDAI has issued guidelines to standalone health insurers and general insurers offering health insurance products to start giving an option to customers to pay premium of insurance policies in installments rather than lump sum. This will be applicable for health insurance policies that are due for renewal up to 31st March, 2021. Policyholders can opt for it according to their convenience as the premium will remain the same in both the scenarios,” says Amit Chhabra, Head-Health Insurance, Policybazaar.com
In general, the premium of health insurance policy is paid on an annual basis by the policyholders. Most insurers quote yearly premium and, therefore, as a general practice, the policyholders also pay the premium once a year. However, as per the health insurance guidelines, the regulator allows insurers to add other premium payment options such as different frequency or even taking premium in instalments in individual health insurance policies. Some insurers provide an option to pay a premium for two years together and thereby provide a discount.
IRDAI has issued a circular recently reiterating the existing rule of receiving a premium in instalments from policyholders especially in these times when owing to COVID-19 outbreak, the need for easing the payment of health insurance premiums is required.
The insurers may do so and collect premium in instalments in all or specific health insurance products. As a policyholder, you should, therefore, check with the insurer if the premium payment in installment is allowed in your specific policy.
In providing installment facility, the insurer will, however, be required to meet the conditions set by the regulator.
The insurer may provide monthly or quarterly payment of premium payment frequency. However, 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. The Factors applicable, if any, to allow the change of premium payment mode (frequencies) shall be fair and reasonable.
The premium mode (frequency) proposed to be added may be monthly, quarterly or half yearly and the resulting premium amounts under each mode (frequency) are consistent with premium amounts under other premium modes (frequencies) of the underlying product.
If the insurer decides to go ahead and provide premium payment facility in installments, then they will have to publish the same along with conditions on their websites. The insurers have to also communicate the same to policyholders and get their consent before providing the installment feature.