Who should opt for multi-year health insurance? What are its benefits and drawbacks? Let's find out.
Health is wealth – we have heard of this adage, for as long as we can remember. This holds true in every way, because if your health isn't in good shape, you are bound to shell out wealth in unimaginable ways. Fortunately, we have a cushion in the form of health insurance. But is your policy enough? Well, turns out that with rising medical costs, it is important to stay protected year after year. That's where multi-year health insurance policies step in.
As the name suggests, this kind of health insurance policy offers coverage for two years or more. In this case, you pay the premium upfront for the duration of the policy. This also eliminates the need to renew the policy every year, as you would otherwise do.
So, is it a good idea to go for multi-year health insurance? Let's find out more about the advantages.
Advantages of multi-year health insurance plans
Of course, it is beneficial, especially if you don't want to go through the hassle of renewing your policy, every year. Like we said earlier, you pay the premium once and for all, when you purchase the policy. In return, you get coverage for a few years.
Without further ado, let's take a look at the other advantages:
1. Reduced premiums
When you opt for a multi-year health insurance plan, you can save up in the long run. How? Because most insurance providers provide a concession, when you go for a multi-year health insurance plan. This is generally not applicable, if you renew your plan annually. What's more, the savings can range anywhere between 7 and 15%.
2. Increased savings
Apart from enjoying savings through reduced premiums, you can also get another benefit when you go for multi-year insurance plans – and that is the lock-in benefit. Generally, as you age, your premium goes up, because you need higher coverage. When you decide to opt for a multi-year health insurance plan, you pay the premium upfront and that continues for the next few years. So, you don't have to worry about any changes.
3. Peace of mind
Once you get your health insurance policy sorted for a few years, you don't have to keep running around to get it renewed time and again. What's more, the documentation also reduces, which is a positive sign.
4. Tax benefits
If you have chosen a multi-year health insurance plan, you can split your one-time premium payment in a proportionate manner and receive tax benefits under Section 80D of the Income Tax Act, 1961.
Are there any drawbacks?
While going for a multi-year health insurance policy is largely advantageous, if you decide to cancel or port it, say after a year or even before that, you will run into losses.
Also, it is quite likely that the health insurance policy has certain restrictions. For instance, a certain disease may not be covered under your policy and has a waiting period of two years. If you decide to switch to another policy, it may be a tedious process.
The last word
All in all, multi-year insurance policies are ideal for those who do not want to go through the hassle of renewing the policy annually. There are others who often miss out on the renewal date – for them, this is again a good idea. This is particularly helpful in case medical emergencies crop up – now if you had not renewed the policy, you would have to pay out of your own pocket. This is no worry, when it's a multi-year health insurance policy.
Also, as mentioned above, the premium remains the same throughout the policy, so you don't even have to worry about advancing age. The policy can be renewed again, once the term is complete. Unless then, you can stay at peace.
If this is something that's on your mind, go ahead and invest in a multi-year health insurance policy today!