Health Insurance Premium Can Now Be Paid in Monthly, Quarterly, Half-Yearly and Annual Installments-Know the Claim Details Here!

Until recently, health insurance premiums had to be paid annually. But IRDAI (Insurance Regulatory and Development Authority of India) has given some relief to the health insurance policy holders as they are now allowed to pay premiums on a monthly, quarterly, or half-yearly, in addition to the current option of paying it annually. Until now, only premiums for life insurance could be paid monthly, quarterly, half-yearly, or annually. 

But with this covenience, one may be unsure of what will happen in the case where the insured who has opted for a monthly payment of health insurance premium, needs to make a request for reimbursement of claim after having paid premium for 2 months for the health insurance policy purchased?

Will one face any issue if request for a claim is made before paying a premium for the year?

The insurer cannot deny a relevant claim even in the case where the insured person has brought it on the basis of the monthly premium. So, if the premium is paid for two months, and an insurance claim has been filed for reimbursement, then the insurer has to process the same. Rashmi Nandargi of Bajaj Allianz shares that instalment based premiums will not affect the claim settlement process. 

But in this case, the insured will be required to pay the entire remaining amount of the premium in a go or the insurer can deduct the remaining premium amount from the total amount claimed. 

Will the premium amount vary if paid in instalments?

No. As per the insurance regulator IRDAI, the insurers are allowed to collect premiums monthly, quarterly, half-yearly, as well as annually same as previously. And the instalment payment cannot change the basic premium amount as approved by the IRDAI for the individual product.  

Still, the insurers can marginally increase the total premium in case the insured chooses to pay on monthly or quarterly basis as against the annual payment. The increase in premium differs from plan to plan.

As per the officials, “The (total) premium does increase slightly as you move from annual to quarterly to monthly premium payment mode. However, the effective increase generally will not be that significant.”

The next question arises, will the free look period be shorter if one chooses to pay the premium monthly at the time of purchasing the policy? 

Freelook period is the time during which the buyer of the new health insurance policy can quit the policy without paying any penalties, except for the risk already covered including surrender charges, etc., to the insurer. Generally, this period is of 15 days after the policy document has been received. 

The Chief Executive Officer of a Delhi-based Insurance Broking Firm shares, “At the time of purchasing the policy if you opt for the monthly premium payment option, the free look period provided to you will be shorter than that in the annual payment option.”

As mentioned in a circular issued by IRDAI dated 20 September, 2019, “The premium mode (frequency) proposed to be added may be monthly, quarterly or half-yearly and the resulting premium amounts under each mode (frequency) are consistent with premium amounts under other premium modes (frequencies) of the underlying product.”

Can a policyholder change premium mode of their existing policy?

If a policyholder wishes to change the premium mode, he/she can opt for that, but only at the time of policy renewal and not in the middle of the policy period. To change the mode, the policyholder must specify the requirement in the form provided at the time of policy renewal.   

Lastly, is monthly or quarterly mode of payment beneficial?

Annual premiums often prove to be heavy on the buyer’s pocket. So, the new measure of making payment in instalments can bring a lot of ease to the policyholders.

These new guidelines set will not only increase health insurance penetration in the country but will also help people buy a larger cover for themselves and their loved ones which until now might be postponed due to shortage of funds. Also, it would help the senior citizens get covered under good health insurance, the premium for which they can pay from their limited monthly incomes. Hence it tends to be seen that the measures taken by the IRDAI for development of health insurance business are certainly going to bring productive outcomes in the future.

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