Why does my health insurance premiums increase?
Health Insurance premiums increase over a period due to the following reasons:
1) Change in Age Band: (Personal level). Typically, premiums keep changing in a band of 5 years of age. Till 35 years, the premiums remain the same. At 36 years of age, it changes; at 41 years of age, it changes & so on. The age considered is the age of the eldest member of the family insured.
2) Medical Costs Inflation (Industry level): the cost of treatments keeps increasing every year. The same treatment which costed 50,000/- a few years ago would be 1 lakh now. So even if the number of claims remain the same, the insurance company may have to settle more amount now, owing to inflation of costs. Hence the premiums also keep increasing to keep up with this rise in treatment costs / claims. Typically all insurance companies raise the premiums (one-by-one) once in a period of 5-7 years.
3) More claims (Insurance company level): the specific insurance company may have experienced many claims & hence it will be pushed to raise the premiums for its customers to ensure it doesn’t run into underwriting losses.
So what to do about it? We can consider the possible options as below:
- Instead of increasing the base policy cover, one may opt for top-up policy with the base policy cover as the deductible (typically the base policy must be at least 10 lakhs).
- opt for deductible option - you would get reduced claim settled as per the deductible amount opted for; but the premium will be lower.
- Pay 2-3 years premiums in advance - you will get discounts up to around 7.50 - 10%.
- Port the policy to a different insurer - although there is no guarantee the new company will not increase the premiums the next year.
