Here's why you should upgrade to a multi-year health insurance policy

Though purchasing a health insurance policy was precisely important, most of us didn’t realize this before the undulating global pandemic, COVID-19. Health insurance cover is a tool that guards the policyholders financially against critical illnesses. The insurer pays the "sum assured" in exchange for the annual or monthly premiums paid by the insured. Or maybe you can pay all the premiums at once by opting for a multi-year health insurance policy. But what exactly does multiyear health insurance mean? And why should you opt for a long-term health insurance policy? Continue reading to find out! 

What Is Multi-Year Health Insurance Policy? 

Due to the daily hustles and despite numerous reminders from the insurance companies, we often fail to pay the premium on time. As a result of the non-payment of the premium, our insurance policy has lapsed. Here is when a multiyear health policy plays a key role in saving us from the termination of our health policies. 

In simple terms, a multiyear health insurance plan is an insurance product that provides coverage for more than one year. An insured must pay the entire premium at once at the time of the policy's inception. Henceforth, unlike annual health plans, you need not stress about the policy renewals in this case, as multiyear insurance plans provide a long-term solution. 

Why You Should Upgrade to a Multiyear Health Insurance Policy? 

As mentioned above, a multiyear health plan is as beneficial as a vat full of golden coins. Listed below are some of the reasons why long-term insurance is more beneficial than annual health insurance policies. 

• Attractive Bonus and Discounts: 

Long-term insurance plans come with a lot of features and benefits, and one of them is providing discounts. The policyholders can get a discount of up to 10% on a two-year health insurance policy term. Aside from that, purchasing a three-year health plan can reduce the premium by 15%. 

• Renewal-Free Protection: 

In annual health insurance policies, a policyholder must renew their plan each year to continue to get protection from insurance companies. In any case, if you don’t timely renew your insurance, your policy will lapse, and all the benefits, such as waiting periods  and cumulative benefits, will be lost. 

However, if you have a multi-year policy, you won't need to worry about memorizing your policy due date each year. Additionally, you will not have to worry about saving money each year to pay the premium. All you have to do is to pay the premium for three years at once at the time of purchasing the policy and reap the benefits throughout the policy period. 

• No Increased Premiums:

Due to inflation, health insurance premiums can increase abruptly. Additionally, as you get older, the probability of a premium increase rises because you are more likely to have age-related medical problems. 

However, if you have a multiyear policy, your premium is fixed for that period of time. For instance, if you have bought a three-year multiyear plan, for those three years, your insurance company cannot raise your premiums regardless of market inflation. As a result, you avoid having your annual premium revised and wind up making significant financial savings.

• Easy EMI Installments:

Similar to annual health plans, you can pay the premiums of your multi-year insurance in easy installments. Thus, you don’t have to worry about arranging a corpus of funds to pay three years' premiums all at once. Additionally, a policyholder has the flexibility to choose their preferred payment frequency.

This implies that you have the choice of paying the premium for your multi-year coverage in monthly, yearly, semi-annual, or quarterly installments.

• Tax Benefits: 

Under Section 80D of the Income Tax Act, annual health insurance premiums paid for oneself, one's spouse, and one's children are eligible for tax deductions of up to Rs. 25,000. However, in the case of multi-year health insurance, you cannot claim the entire premium amount all at once. You will receive a proportionate percentage of the one-time premium you paid back as a tax advantage.

• Lock-in Benefit:

The premium of your health insurance policy increases with your age. For instance, a person aging 30 years will pay a 30–40% higher premium as compared to a 20-year-old individual. If you pay your premiums all at the same time, the premium amount will be fixed for the following two or three years. Any change in premium rates won’t impact you. 

Conclusion 

A multiyear health insurance policy is advantageous in numerous ways. Besides providing financial support, it would keep you stress-free from renewing your insurance plans every year. However, it is fruitful to know all the terms and conditions beforehand to avoid any claim rejections. 

Also Read: All about consumables add on cover in Health Insurance