Insurance premium comes as any season's expense, but insurance is surely the gift that keeps giving. As your body braces through the scorching summer, chilling winter and monsoon dengue terror, you just hope you do not fall sick, let alone hospitalised. Illness does not see the seasons or your savings pocket, it happens and it shackles one like a house of cards.
Rising medical costs, advancements in technology and a growing demand for improved healthcare services have resulted in a significant upswing in medical facilities in India. Experts also suggest that substantial claims raised during the COVID-19 pandemic is one of the key contributors to the inflationary pressure on medicare premiums. The soaring Indian medical inflation has outpaced countries like China and Japan in June’22 as per a report suggested by Motilal Oswal.
Furthermore, individuals in metropolitan areas, particularly those in top-tier cities, are the primary consumers of private health insurance and that can be inferred from the substantial rise in treatment costs in these regions. In recent years, insurers have sharpened their profit margins. For example, Star Health boosted its operating profit from 2.7% in FY19 to nearly 8% in FY23, despite some dips during the pandemic.
With a strong increase in demand for healthcare, health insurance premiums have soared high with an average increase of 10-25% over the past year. As quoted in The Ken, “Insurers blame rising healthcare costs, coupled with a Covid-induced jump in the number of claims. And hospitals point to higher input and human resources [HR] cost post-pandemic” as the reason for the 30–35% jump in healthcare prices post-pandemic.
The rise in hospital treatment and medical inflation has become the apparent reason for the exorbitant increase in premiums. It is an inevitable expense that one needs for a lifetime. Due to this surge, we have observed people looking for affordable options to move out from their existing insurance. However, the move from the existing ones to the new ones needs to be a calculated one.
Here are the key aspects to keep in mind before moving to a new policy.
Keeping these aspects in mind, here are simple scenarios that can help you to make better decisions.
Opting for insurance while in good health, as opposed to solely in youth, is a prudent approach.
“Buy Insurance When You Don't Require It. You May Not Get, When You Require it.”
Reason
Being in good health allows individuals sufficient time to carefully consider and choose the most suitable health insurance coverage, rather than making hasty decisions prompted by sudden needs.
Furthermore, acquiring insurance at a healthier age offers the advantage of time, taking into account factors such as overall well-being and medical history, which collectively contribute to a potential reduction in insurance premiums.
“Insurance is primarily a tool of risk management. Illness can occur anytime and irrespective of your age, it is necessary to have health insurance with good insurance cover. With many different products available it is easier to get lost in the sea of insurance products. You need to consult a health insurance expert or a financial advisor to help you navigate through it and settle on the right choice. However, one cannot overlook the aspect of being healthy. Health insurance is a necessity and so is maintaining your health.”
MIMI PARTHA SARATHY
Managing Director,
Sinhasi Consultants Pvt. Ltd.
People look out for other health insurance options for comprehensive coverage at an affordable premium, additional benefits, better customer service or treatments that their current policy does not cover. But it will be a challenging case for those who already have a claim history, or ailments or acquire ailments in the due course of the insurance period, then it is advisable to continue with your existing insurance policy.
Reason
When you buy insurance, there is a continuity benefit attached to it and once you stop it or you go for a fresh policy, there is a higher probability of you losing the continuity benefit. Depending on your claim history, health condition, and the company’s policies, the fate of your continuity benefit will be decided. Also, the waiting period to avail the cover benefits on the newly purchased insurance can be long depending on the company’s policy. In these cases, you will be disadvantaged in many ways- losing your money in the previous insurance (if it was a new purchase), buying a fresh one and waiting period to gain the benefit from your newly purchased insurance. Eventually, you just save a penny if you buy one.
In scenarios where your age and health are not in support of you, especially the elderly, then it is in your best interest to continue with existing policies and not buy another new insurance.
Reason
The need for insurance in these scenarios is more frequent than in the previous cases. Discontinuing your existing insurance or opting for new insurance will bring more trouble than the increased cost of insurance premiums. In these instances, it is always better to follow a defensive approach and not expose yourself to risky situations.
