With health insurance premiums rising, here's how policyholders can save

Health insurance premiums in India are rising, but most customers experience only moderate increases, according to an analysis by insurance marketplace Policybazaar. While some policyholders face sharp hikes, many find ways to manage costs by switching plans or opting for features that reduce long-term expenses.

 

Here's what the analysis shows

 

— 5% of health insurance customers see a renewal premium increase of over 30%, mostly due to age-related factors.

— 10% of customers face hikes of 30% or more, but half of them are able to offset the increase by choosing plans that offer better value.

— 53% of policyholders experience an inflation rate of less than 10% and continue with their current policies.

 

— 95% of customers have seen inflation stay below 15% over the last decade.

 

In terms of compound annual growth rate (CAGR), premium increases vary:

 

— 52% of customers see a CAGR of 5-10%.

— 38% face a CAGR of 10-15%.

— Only 5% have a CAGR below 5%.

— A very small percentage see a CAGR of 15-30%, as per the analysis by Policybazaar

 

More customers renewing despite rising costs

 

Renewal rates for health insurance have risen by nearly 10% over the past two years, indicating that more policyholders are choosing to continue their coverage despite the increased costs. Many insurers are now offering plans that adjust over time to manage medical inflation, helping customers maintain affordability.

 

How can insurers address medical costs

 

According to  ACKO India Health Insurance Index 2024, healthcare costs in India are increasing at an annual rate of 14%. The index reveals that double-digit inflation is causing the rise in healthcare expenses.

 

It shows that 23% of hospital costs are funded through borrowings, adding financial strain on families. With 62% of healthcare expenses paid out of pocket, the report emphasised the need for improved health coverage to protect individuals from unexpected health crises.

 

In such a scenario, how are insurers addressing medical costs?

 

"To help customers cope with inflation, insurers are introducing features like cumulative bonuses, which increase coverage amounts every year, even if no claims are made. These bonuses can expand coverage by up to seven or ten times over time," says Amit Chhabra, CBO of General Insurance at Policybazaar.

 

Chhabra explained, "for example, a 41-year-old in Delhi opting for a family floater plan with a 7x bonus rider could see their total coverage grow from Rs 10 lakh to Rs 70 lakh over five years, while the premium rises from Rs 27,276 in 2024 to Rs 36,700 in 2029. However, the cost per Rs 1 lakh of coverage would drop from Rs 2,728 to Rs 524".

 

Popular plans offering coverage growth

 

Several insurers offer policies that increase coverage over time. Here's a compilation by Policybazaar:

 

ABHI Active One: Rs 24,740 premium, Rs 2,473 for bonus coverage; sum insured (SI) Rs 10 lakh + Rs 10 lakh extra, 5x guaranteed benefit.

Care Supreme: Rs 27,276; inbuilt bonus; SI Rs 10 lakh, 7x guaranteed benefit.

HDFC Ergo Optima Secure: Rs 39,268; inbuilt bonus; cover expands 4x.

ICICI Lombard Elevate: Rs 25,823; Rs 3,720 for bonus; 100% SI addition per year.

Niva Reassure 2.0 Titanium: Rs 30,949; inbuilt bonus; SI Rs 10 lakh, 10x guaranteed benefit.

Star Super Star: Rs 27,074; Rs 6,770 for bonus; unlimited SI accumulation. 

 

Ways to reduce premium increases

 

According to Policybazaar, customers looking to lower their premiums have several options:

 

Switching to better plans within the same insurer: Newer plans often offer improved coverage at better rates.

Opting for deductibles: Choosing to cover a portion of expenses out-of-pocket can significantly lower premiums.

Selecting limited network coverage: Restricting hospital choices to a defined network can reduce premiums by up to 15%.