Choosing the right health policy can save up to 39 per cent of your annual premium
06-Sep-2023 •Research Desk
Having higher medical coverage is the order of the day. That's because medical costs are rising faster than average inflation. With medical treatment set to grow at 8.6 per cent this year, as per Global Medical Trends Survey of 2023, a hospital bill of Rs 5 lakh today will double in eight years' time. Hence the need for higher medical coverage.
But a higher insurance policy is accompanied with affordability issues, more so because premiums increase with age. Since this can burn a hole in your pocket, we explore four options that can save a sizable chunk on your premiums.
If health cover: Rs 15 lakh. The insurer will cover your medical bill up to Rs 15 lakh.
If health cover: Rs 15 lakh; Deductible: Rs 25,000. You pay the initial Rs 25,000 before your insurance policy kicks in.
If base health cover: Rs 5 lakh; Super top-up: Rs 15 lakh. The super top-up will come into effect once you exhaust the basic plan.
If base health cover: Rs 5 lakh; Deductible: Rs 25,000; Super top-up: Rs 15 lakh. You first pay the deductible from your pocket, then exhaust your basic policy and finally use the super top-up policy.
Now that we understand the four options, let's consider which plans will give you significant health coverage at a lower premium. To provide a real-life example, we considered HDFC Ergo. Refer to the table 'Four ways to get a health cover'.
|Total health cover||Option 1||Option 2||Option 3||Option 4|
|Rs 15 lakh||35580||26688||29088||22503|
|Rs 20 lakh||37620||28224||29968||23383|
|Rs 25 lakh||39528||33600||30738||24153|
|Savings in Option 2 (in %)||Savings in Option 3 (in %)||Savings in Option 4 (in %)|
|All numbers for HDFC Ergo's Optima Super Secure (or Secure) family floater plans. The super top-up figures are also for HDFC Ergo's 'my: health Medisure Super Top Up' offering. Considered a family floater of 4 members: 35-year man, 33-year woman, 7-year (child 1) and 4-year (child 2) living in Delhi-NCR.|
Clearly, the basic policy with deductibles and super top-ups (Option 4) can save you 37-39 per cent on your annual premiums compared to a vanilla health policy (Option 1). That said, each of these policies has its share of pros and cons.
Basic medical policy (Option 1)
Pros: Convenient and no complications.
Cons: Annual premiums are very high.
Basic policy with deductibles (Option 2)
Pros: 15-25 per cent lower premiums than option 1.
Cons: Need to pay deductible amount from your pocket. Not all insurers provide this option.
Basic policy with super top-up (Option 3)
Pros: 18-22 per cent lower premiums than option 1. Treated as two policies; helps you and your spouse save tax.
Cons: Super top-ups come with a few strings attached, such as limits on hospital room rent. Treated as two policies, so need to file your claim twice.
Basic policy + Deductible + Super top-up (Option 4)
Pros: Pay the most affordable premiums. Treated as two policies; helps you and your spouse save tax.
Cons: Pay the deductible amount from your pocket. Treated as two policies, so need to file your claim twice. Super top-up plans can insert sub-limits, such as a cap on hospital room rent.
We think all four options are viable and usable. You can pick the one that suits you best.
Also read: How to increase your life insurance cover