By Amit Chhabra
Considering the financial stress due to job losses, pay cuts and lower revenue most salaried professionals and businessmen are facing, the Insurance Regulatory and Development Authority of India (Irdai) has come out with a circular for modifications in policies filed by general and standalone health insurers. The regulator has allowed the payment of health insurance premiums in instalments.
You will now get the option to pay your health insurance premiums on a monthly, quarterly or half-yearly basis in addition to the current option of paying premiums on an annual basis. Each insurer, though, can decide whether or not to offer this facility to the consumers.
For instance, if the annual premium of your health insurance policy is Rs 12,000, you can now ask your insurer to change the frequency of payment to monthly mode, and pay Rs 1,000 per month for next 12 months. However, this relaxation in payment process is for one year only, though the insurer can decide to offer it forever or for one year. For an individual experiencing job loss or pay cut, paying Rs 1,000 per month is much more affordable than paying Rs 12,000 in just one month as a lump sum for a comprehensive family-floater health insurance cover.
Buying larger cover
Payment of health insurance premiums in instalments will increase the adoption of health insurance by bringing more people under the insurance blanket. More premium frequency options will help people to buy a larger cover, which usually was postponed due to shortage of funds or a compromise was made by going for a lower sum insured. The monthly premium payment mode is beneficial for senior citizens since the premium for senior citizen health plans is significantly high.
With the regulator allowing insurers to collect premiums on a monthly, quarterly or a half-yearly basis along with annual collection, there is no major change expected in the basic premium of the health insurance plans. However, as allowed by the regulator, the insurers are allowed to marginally increase the total premium if the policyholder opts for quarterly or monthly premium payment option in place of annual premium payment option. The increase in premium may vary on a plan to plan and insurer to insurer basis and the effective increase will be completely fair and reasonable.
Payment of claims
If you choose the monthly payment mode for paying the premium of your health insurance cover and after paying just two or three instalments, you need to file for a claim, under such a scenario, the insurer will be liable to process your claim. However, you will have to either pay the remaining premium in one go to the insurer or the insurer may deduct the remaining premium from the total claim amount payable.
For instance, let us assume your annual premium is Rs 12,000 and you have chosen a monthly instalment-based payment process under which you have paid three instalments of Rs 1,000 each, amounting to a total of Rs 3,000. Now, in middle of the policy term you file a claim for Rs 1,50,000. In such a scenario, you will either have to first pay the remaining Rs 9,000 of your premium to the insurer to process the full claim or the insurer will deduct the remaining Rs 9,000 from your claim amount and will process the claim of the remaining amount, i.e., Rs 1,41,000. (1,50,000 – 9,000).
The writer is health business head, Policybazaar.com