Multi-Year Health Insurance: Convenience and Savings Explained

Benefits of Buying a Multi-Year Health Insurance

Amid the rising medical expenses, a health insurance policy has become a necessity for everyone to meet any health emergency. You can buy health coverage for a year and keep renewing it annually by paying the renewal premium in annual health insurance. However, you could eliminate the need to renew the health insurance policy every year with the aid of multi-year health insurance plans.

Multi-year health insurance is the long-term alternative to annual health insurance and can be much more convenient and economical. Multi-year health insurance is a product that you might be needing for a long time as you pay a lump sum premium once and with a validity of multi-years after that.

Benefits

Discounts on long-term policies

You can benefit from the long-term policy discount by purchasing a health plan for a more extended period of time. When choosing a policy tenure of two years, most insurance firms provide discounts of up to 10%. Similarly, purchasing a 3-year health insurance policy will lower your rate by up to 15%.

No renewals hassle

If you already have an annual health insurance plan, you must renew the policy each year in order to maintain continuous medical coverage. If the policyholder doesn’t renew the health insurance, the policy might lapse or lead to heavy penalties, and they might have to pay from their very own pocket in the event of a medical emergency.

In addition, if there is a gap in your coverage, you will also lose the continuity benefits, such as waiting periods and the cumulative benefit.

However, if you have a multi-year policy, you won’t need to worry about remembering your policy due date each year. Additionally, you won’t need to worry about saving money each year to cover the cost. All you need to do to feel secure for the following several years is pay the premium for three years at the time the policy is purchased.

No chance of yearly premium raise

Due to inflation, health insurance rates may unexpectedly increase. A premium increase is also more likely to be expected as you get older because you are likely to experience age-related problems.

However, if you have a multi-year insurance that lasts for three years, your premium is fixed for that three years. Your insurance company is not allowed to raise your premium for those three years. You avoid the annual premium review as a result, which results in significant financial savings.

Pay the premium with convenient EMIs

You can pay the premium for your multi-year health insurance coverage in instalments, just like you would for an annual health policy. This saves you the hassle of paying the premium for three years at once. In fact, insurance providers let you make the payment at the frequency that works best for you. You have the option of paying the multi-year policy’s premium in yearly, semi-annual, quarterly, or monthly installments.

Enjoy annual tax benefits

Let's understand the tax benefits for multi-year health insurance policy. The multi year health insurance policy tax benefit is one of the advantages. Similar to an annual policy, you can also receive tax advantages for multi-year health insurance coverage on the premium payment. The entire 3-month premium, however, cannot be claimed in the same calendar year.

According to government regulations, you are allowed to get a proportionate amount of the entire premium amount each financial year.

However, before purchasing a multi-year health policy, make sure to verify the current tax policy to learn about the terms and circumstances

Disadvantages of multi year health insurance policy

Multi year health insurance in India has some disadvantages. It’s essential to remember that when you get a multi-year health insurance plan, you are committing to one insurance provider for a number of years. It’s possible that you won’t be able to change your plans mid-term if you’re unhappy with your insurance company.

In this situation, your only choice would be to terminate your health insurance and there is no guarantee provided that you will receive a refund of your premiums, though. So, before purchasing a long-term plan, one must always do extensive research on the insurance company and the plan.

For the uninitiated, the cumulative bonus is a benefit that increases the policyholder’s sum assured when they maintain no claims throughout the policy’s duration. As its name implies, the cumulative bonus is cumulative in nature.

As a result, the percentage of the bonus rises each year that you do not raise a claim. However, it could be challenging to compute your cumulative bonus if you have a multi-year health insurance plan. It is strongly advised that you get clarifications regarding cumulative bonus from your health insurance company.

Who should buy a multi-year policy?

The nature of multi-year health insurance coverage under annual health policies and multi-year health policies remains the same. However, a multi-year health policy may be suitable for individuals who wish to save on the premiums while also avoiding the inconveniencies of yearly renewals of policies as it might be challenging for some policyholders to keep track of their renewal dates.

After selecting an insurance plan best suited for your needs, you may buy a multi-year policy. However, it is strongly advised to check all the policy documents thoroughly and also compare similar plans of other insurance companies before choosing and buying the best insurance plan for you.

Conclusion

An extended health insurance plan offers several advantages. Along with the significant financial savings, you also spare yourself the trouble of having to renew the coverage annually. Multi year health insurance tax benefit is advantageous to the persons who buy such plans. Multi year health insurance costs vary based on the length of the policy.

Therefore, choose a multi-year health insurance policy rather than an annual health insurance plan for your next renewal. But buy the best multi year health insurance only after analysing its pros and cons.

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FAQ

What factors should I consider before buying a top multi-year health insurance plan?

When considering a multi-year health insurance plan, it is vital to consider few factors such as coverage options, premium costs, and the insurance company. It is advised to consider your personal healthcare needs and financial situation before buying health insurance.

What are the eligibility criteria for a multi-year health insurance plan?

The eligibility criteria for a multi-year health insurance plan might vary from one insurance company to another. Generally, you will need to meet certain age and health requirements to be eligible for health insurance coverage. It is always safe to check with your insurance agent or insurance company for specific details.

What is the 80d deduction for multi-year health plans?

A deduction of Rs 5,000 for any payments made towards the preventive health check-ups is included under Section 80D.