Health insurance for senior citizens is expensive: Here's what they must do

Those who find premiums unaffordable should go for a plan with deductibles

On January 30, the Insurance Regulatory and Development Authority of India (Irdai) issued a circular directing insurers not to revise the premium for senior citizens by more than 10 per cent per annum. If an insurer proposes to increase the premium for senior citizens by more than this level, it must obtain prior approval from Irdai.

 

Chorus of complaints

 

Three factors lead to an increase in health insurance premiums. One is medical inflation, which in India is around 14-15 per cent. The second is the insurer’s claims experience, and the third is change in age bracket. Once a customer moves from the 60 to 65 age bracket or from the 65 to 70 age bracket, there is often a substantial jump in premium.

 

“Health insurance premiums do not necessarily increase every year. A company might keep the premium constant for three years, after which it might bump it up substantially. Customers who entered that plan a year ago would feel that their premium has undergone a hefty increase within a short period,” says Naval Goel, chief executive officer, PolicyX. 

 

Senior citizens have a higher propensity to fall ill because of their advanced age. As a result, insurers tend to increase their premiums by a higher amount. “In any case, premiums of senior citizens are already high. And whenever there is a sharp increase, it leads to a lot of complaints. Hence, the regulator has taken cognisance of this issue,” says Kapil Mehta, co-founder, SecureNow.

 

The fact that most senior citizens do not have an active income and are dependent on their savings may also have prompted the regulator to impose this cap. 

 

‘Comfort’ regulation

 

The imposition of a cap is expected to have a positive impact. “It will provide comfort to senior citizens that their premiums will go up within a certain limit. More senior citizens, or their children (on their behalf), will be incentivised to purchase health insurance,” says Siddharth Singhal, head of health insurance, Policybazaar. Budgeting for this expense will also become easier.

 

Insurers are now expected to be more sensitive to the fact that the regulator is keeping an eye on pricing for senior citizens. “They will now give a lot of thought to how they price their new products and how they hike the premium over the years,” says Mehta. 

 

The mindset of locking in customers at a low price and then jacking up the price later is expected to die out.

 

Negative impact

 

Experts see two possible negative effects of the cap on pricing. The initial price might be set higher. “Insurers will want to make sure that they get the pricing right in the first round (at the time of launch),” says Mehta.

 

They will, however, have to be mindful of competitive pressures. “If you set the premium too high, fewer customers will come into your pool,” says Singhal.

 

Some tightening of underwriting standards may also occur. “Insurers could get stricter regarding whom they issue the policy to,” adds Mehta.

 

Once a policy has been launched, the coverage it offers cannot be reduced. But there might be fewer augmentations to its features. “Earlier, whenever there was a price increase, insurers used to add some features to the plan. We might see limited instances of that in the future since insurance companies may not be able to afford such improvements,” says Goel.

 

Managing premiums

 

One option for reducing the premium is to go for a deductible of Rs 3-5 lakh. “Whatever amount you choose as deductible, keep that much aside for medical conditions,” says Mehta.

 

When the need for hospitalisation arises, go to a preferred partner network hospital. “Going to such a hospital can get you a discount of up to 15 per cent,” says Singhal. If you go for a lower category of room (say, twin or multi-sharing), that can also get you a discount.

 

Nowadays, plans have become modular. “It means you can avoid all those features which you are not likely to need,” says Singhal. He also recommends that customers who find it difficult to pay a large amount annually should go for monthly payments, which are more bearable.

 

Instead of waiting till the age of 60 or later, buy health insurance at an early age. “This will allow you to get a good plan at a reasonable price,” says Goel. As you age, the number of choices available to you also reduces (you may already have a few ailments due to which the range of policies you can choose from becomes limited). He also suggests going for a no-frills plan that tends to be more cost-effective.

 

Tight underwriting norms

 

Underwriting norms for senior citizens tend to be strict and could get even stricter in the coming days. “Look for specialised senior citizen plans which tend to have more accommodating underwriting standards,” says Ashish Yadav, head of products and operations, ManipalCigna Health Insurance. He adds that insurance companies may evaluate risk more favourably if you provide a thorough account of your medical history and are open about existing health issues.

 

When an insurer turns down your application, they typically provide the reason for doing so. Try another insurer. “Go through a pre-underwriting process where you provide your medical reports and get a view from them about whether they are likely to accept your proposal,” says Mehta.

 

Another option, says Singhal, is to go for an ailment-specific product (say, heart-related), which tends to accept customers with pre-existing ailments.

 

Goel suggests enlisting the help of a good broker who may be able to guide you regarding which insurer is likely to accept your case.  Compare features and premium  Premiums are for a 60-year-old male living in Delhi for a Rs 20 lakh sum insured 

Insurer	Plan	Key Features	Premiun Annually (Rs)
NIVA BUPA	ReAssure Bronze+ Value (Direct)	Carry forward your unutilized base coverage up to 3X. When you claim, get back your base coverage, unlimited times and forever.   No Room Rent Limit   ₹25 lakh Claim Bonus Unlimited Restoration of Cover,Forever	36,878
CARE	Care Advantage	Single pvt AC Room   ₹5 lakh No Claim Bonus   Restoration of cover once a year	41,323
STAR	Super Star	Super Star	42,415
ICICI LOMBARD	Elevate	Claim Unlimited Amount once in a policy lifetime with rider - An industry first feature!   Single pvt AC Room   ₹10 lakh No Claim Bonus   Unlimited Restoration of cover	48,877
ADITYA BIRLA HEALTH INSURANCE	Activ One	No Room Rent Limit   ₹75 lakh Renewal Bonus; optional   Unlimited Restoration of cover	55,331

  

Source: Policybazaar.com