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Is Health Insurance Only a Short Term Investment?

Updated On Dec 09, 2020

Health insurance solves different purposes for different people. For some it may be an investment, for some, it may be a tax-saving instrument, while others may buy it only for health protection. But one sentiment which is common for everyone purchasing health insurance is the peace of mind. 

Health insurance plans offer benefits beyond pure protection to the policyholders. It is among the most useful of all the purchases you will ever make. It is evident that you can save a lot on taxes when you buy health insurance, apart from the obvious protection against healthcare expenses and financial burden. Which is why health insurance must be included in your financial plan. 

Also, if health insurance gives you all of the above-mentioned advantages, then why would anyone not continue with the plan? So, if properly tailored to your needs and purchased at a competitive price, you can always choose to renew existing health insurance plans. 

Which, answers the question, that no, health insurance plans are not only short term investments, but should be renewed every year. 

Let us understand why-


It is the most beneficial when in case you suffer from any hospitalisation. Not having health insurance in such cases could hit your pocket hard leaving you in financial crisis. Yes, one hospitalisation has the potential to leave you in financial burden. Your plan clears your bills and keeps you tension free even in hard times. 

During the claim-free years, you may get a thought that the premiums you pay aren’t fetching you anything. But here also, the insurer provides you No Claim Bonus that increases your sum insured for which you don’t have to pay anything extra. In this case, sometimes the benefits reaped are far more than the premium paid under health insurance plans. 

Read here: Guide To Health Insurance Renewal Online

2.No Claim Bonus 

As discussed above, the policyholders receive No Claim Bonus from their respective insurers which is cumulative in nature. If your policy gets lapsed, you even lose out your earned benefits in the form of accumulated NCB. But if you continue with your health insurance policy, then you may even enjoy benefits that you haven’t even paid for. 

3.Waiting period

There is a waiting period clause in health insurance plans which states that certain pre-existing ailments are not covered under your plan for a specific period of time, known as the waiting period. A waiting period may vary from 2 years to 4 years for different health insurance plans. 

But in case you end your health insurance policy tenure, then the waiting period already served will also get lost. Which means, if you opt for another health insurance plan, then you will have to serve again the waiting period of the new plan.     

4.No policy after a certain age 

Renewing your health insurance policy every year will let you enjoy the benefits for a long period of time if you buy it at an appropriate age. But if you let your policy lapse for any reason like better benefits or you may simply think it as a waste of premium for any claim-free year, then you and your family doe not get protection against any healthcare expenses during that period. 

Also, purchasing health insurance is not as easy as you may think during the later stage of life. Health insurance companies do not readily offer insurance policies to old people as they usually suffer from pre-existing diseases and also because they are more prone to develop diseases or chronic conditions.       

5. Difficulty in buying health insurance in older age 

The earlier to buy health insurance in your life, the more comprehensive plan you get with most benefits. If you plan to hop onto another plan in older age for better advantages, then you might be offered limited coverage in the new plan. There would be multiple restrictions and many exclusions under the new plan which will leave you nowhere but in a dissatisfactory situation. 

So, if you want to ensure comprehensive coverage, continuing with a plan for a longer policy term is the best way out. 

Health insurance plan cannot be considered as a short-term investment. All the health insurance plans today are available with lifetime renewability feature and the policyholders must renew their health insurance plans yearly to keep on reaping the benefits. Health insurance renewal will benefit the policyholders as it will be easier for them to continue their coverage during the later stage of life too. So, the best option is always to buy a plan and hold on to it.    

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