A health insurance plan is an important arsenal against the rising costs of medical treatment and the increasing health risks amongst people of different age groups. Buying health insurance can mean paying regular premiums, which may seem like an unnecessary expense to some. But when an urgent medical situation strikes, no other financial resource can be as helpful as a health insurance policy
Out of the many types of health insurance
plans available, one which many individuals may find suitable, is a multi-year health insurance plan. Also called long-term health insurance, this kind of plan requires you to pay the premium in a lump sum once and is valid for multiple years after that.
Buying a long-term health insurance plan can be advantageous in many ways, but may also have its drawbacks. Read on to know the pros and cons of buying multi-year health insurance
Benefits of buying a multi-year health insurance plan
One of the major benefits of buying a long-term plan is that the aggregate premiums become considerably reduced. Though this depends upon the insurer, you are likely to incur reduced premiums because you are committing to the insurer for multiple years. This shows a certain level of loyalty on your part and the insurer may gift you with some savings in regard to the premium. *
Another way that a long-term health insurance plan may be cost-effective is because of the lock-in premium factor. Essentially, your premium increases with your age. So, the premium you pay this year may see a hike next year, especially if you are over 30 or 40 years of age. Hence, if you use a health insurance premium calculator
, the premium estimate rises as you increase the age variable.
However, with a multi-year plan, your premium gets locked for a set number of years. The premium you pay as a lump sum continues for the next few years, which means that you do not have to worry about premium hikes for those years. *
No hassle of renewing every year
Even though the process of health insurance renewal has become easy over the years, it can still be a hassle sometimes to renew it every year. This is all the more prominent when you are responsible for renewing the health insurance plans of multiple people.
With a multi-year health insurance plan, this hassle gets eliminated. All you have to do is pay the premium when buying the policy and you and your loved ones are insured for the next three to five years. The renewal process is to be carried out after the term ends. *
* Standard T&C Apply
Drawbacks of buying multi-year health insurance
When you buy a multi-year health insurance plan, you must remember that you are committing multiple years to one insurance company. If you are not satisfied with your insurance provider and wish to switch your plans in between term, you may not be able to do so.
The only option in such a scenario would be to cancel your health insurance plan. However, there is no surety that your premiums would be refunded to you. So, one must always research well before buying a long-term plan. *
Cumulative bonus may be difficult to calculate
For the uninitiated, the cumulative bonus is a feature wherein the policyholder receives an increase in their sum assured when they do not make claims during the policy tenure. The cumulative bonus, as its name suggests, is cumulative in nature. So, with each year that you do not raise a claim, the percentage of the bonus increases.
With a multi-year health insurance plan, however, the process to calculate your cumulative bonus may be difficult. Getting clarifications with your health insurance provider regarding this subject matter is highly recommended. *
* Standard T&C Apply
Whether a multi-year plan is ideal for you or not depends on your preferences and budget. If you are able to afford a lump sum premium payment and do not want the worry of yearly renewal, a multi-year health insurance plan may be the best option for you. Ensure to connect with a financial advisor and get their expert opinion before buying a health insurance plan.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.