Reasons To Choose Monthly Health Insurance Policies Over Annual Ones

Posted on: Feb 16, 2024 | 3 mins | Written by: HDFC ERGO Team

Reasons To Choose Monthly Health Insurance Policies Over Annual Ones

Benefits Of Having Monthly Health Insurance Plans Over Annual Payments

Health insurance is a significant investment that can help you deal with medical inflation. Therefore, if you are looking to keep your savings intact during medical emergencies, make sure you cover yourself and your loved ones under comprehensive health insurance plans without delay. The insurance companies in India offer a range of health plans to suit different customer requirements and budgets. You can easily shortlist a few and compare them online to find the best option. If you are worried about policy premiums, you can opt to pay the premiums spread over a year (i.e., monthly) for better financial flexibility. Let’s talk about the benefits of paying monthly premiums for health insurance plans.

Monthly premiums vs annual premiums

In India, insurers allow policyholders to pay health insurance premiums monthly, quarterly, half-yearly, or annually. However, monthly and annual payments are the most preferred options.

If you choose the monthly option, you must pay the premium every month to keep your health plan active. On the other hand, if you opt for annual payments, you must pay a lump sum once a year to renew your health plan.

The following table will help you understand the differences between monthly and annual premium payments in health insurance:

Parameters	Monthly Premium Payment	Annual Premium Payment
Premium payment frequency	If you choose the monthly premium payment option, you must pay your policy premium once a month or 12 times a year.	As the name suggests, annual payments are made once a year.
Premium amount	The premium amount is less and affordable.	Since the policy premium is for the entire year, the amount is on the higher side.
Discounts	Insurance companies may not offer discounts on monthly payments.	Many insurers offer discounts to policyholders who pay their health insurance premiums annually.

Benefits of paying monthly premiums for a health insurance plan

The following are the benefits of paying premiums monthly for a health insurance policy —

1. Easy payments

If you opt to pay the premiums monthly for your health insurance policy, you can easily pay the same every month without burning a hole in your pocket. On the other hand, paying an annual premium can create a financial burden, especially if you have a limited monthly income and savings. High annual premiums often prevent people from buying health insurance.

2. Better financial stability

Monthly premium payments are affordable, so you can easily keep your healthcare plan active. This can ease your financial burden during medical emergencies. A comprehensive health insurance policy will cover your hospital bills, pre- and post-hospitalisation expenses, home healthcare bills, daycare procedures, and more. Therefore, investing in one will ensure better financial stability.

3. You can choose a higher sum insured

If you opt for a monthly premium payment option, you can choose a higher sum insured without worrying about paying the entire premium in one go. Having a health insurance policy with a high sum insured can ensure better financial protection during expensive medical procedures.

For example, suppose the sum insured by your health plan is INR 25 lakh, with an annual premium of INR 25,000. If you choose to pay the same on a monthly basis, the premium should be somewhere around INR 2,100 every month, which is quite affordable when compared to paying INR 25,000 at once.

4. Beneficial for senior citizens

Since senior citizens are prone to illnesses and injuries, insurance companies charge higher health insurance premiums to cover the risks. However, most senior citizens have limited earnings and savings and paying a lump sum every year can create significant financial woes. Therefore, paying premiums monthly can help them keep their policy active without worrying about shelling out a considerable amount of money as a lump sum.

5. Tax rebates

Under Section 80D of the Income Tax Act, you can claim tax rebates on paying premiums monthly for your health insurance policy. If you are below 60, you can claim a rebate of up to INR 25,000 every year. On the other hand, if you are a senior citizen, you can avail of a maximum annual tax rebate of INR 50,000 on the premiums you have paid toward your health insurance policy.

Conclusion

To sum up, if you plan to buy health insurance, make sure you keep your monthly income and savings in mind and choose the payment option accordingly. If you can’t afford to pay the entire premium at once, you can opt for monthly premiums. Insurance companies in India also offer multi-year health insurance policies with a tenure of 2 or more years. Therefore, you can check the available options and choose one that best suits your requirements and pocket.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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