Understanding policy period in health insurance

Posted on: Apr 26, 2023 | | Written by:

Understanding policy period in health insurance

Published on April 25, 2023. EST READ TIME: 3 minutes

Health insurance is a valuable investment you can make for your financial well-being. The policy can cover a major part of your hospital bills and prevent financial woes during medical emergencies.

However, before you buy a healthcare plan, it is important that you are well-versed with the important terms used in health insurance to make an informed purchase decision. Apart from policy coverage, inclusions, exclusions, limitations, and premiums, an important term in insurance is the policy period or policy term. Read on to learn about the policy period in health insurance, how it can affect the premium of your healthcare plan and more.

What is the policy period in health insurance?

The policy period in health insurance or a policy term is the time frame for which your healthcare plan will remain active. It is the period between the policy’s starting and ending date.

Most insurance providers in India offer health insurance plans with a policy period of one or more years. Since this can vary from insurer to insurer, make sure you check the policy documents or confirm the same with the insurance provider.

For example, if you have health insurance with a policy period of one year, the policy will lapse after one year unless you renew it within the grace period.

How does the policy period in health insurance affect the premium?

The policy period in health insurance can play an important role in determining the policy premium.

Here’s an example:

Suppose you take a plan of INR 5 lakhs health insurance with a policy premium of INR 8000 annually.

• If the policy period of your healthcare plan is 1 year, you will have to pay a premium of INR 8000 during the policy period. If you decide to renew the policy at the end of the policy term, the premium might increase by a certain percentage.

• On the other hand, if you take a healthcare plan with a policy term of 3 years, the insurer may offer a certain percentage discount on the premium amount. So, instead of paying INR 24000 for 3 years (@ INR 8000 annually), the premium may come to INR 21000 after the discount.

• There is another benefit of taking a long-term health insurance policy. If you have a healthcare plan with a policy period of 3 years, premium revisions will not hurt your pockets. Suppose the insurer increases the premium to INR 9000 after one year. This will not affect you as your policy premium will be fixed at INR 21000 for 3 years.

This is how the period of your medical insurance policy can affect the premium amount. It is wise to take a health insurance plan with a longer policy term, say 2 to 3 years, to lock up the coverage and policy premium for a longer term.

What are the minimum and maximum durations for health insurance policies?

The minimum duration of a healthcare plan is one year. So, when buying a health insurance policy, you must take it for a minimum duration of one year.

The maximum duration of a healthcare plan can vary from insurer to insurer. While most health insurance companies in India offer health insurance plans with a policy term of one year, some may offer a longer tenure of 3 to 5 years.

Important things to consider when choosing a policy period

The following are some important things to consider when you are deciding on the policy period in health insurance:

1. Age and health:

You can choose a longer policy period if you are in your 30s or 40s. When you buy insurance at an early age, the premiums are on the lower side. Also, since you are less likely to fall sick and use your healthcare plan at a young age, you can enjoy a no-claim bonus (NCB) for every claim-free year. A long-term plan will save you from the hassles of renewing the policy every year and cover your bills in case of a medical emergency.

2. Policy premium:

A healthcare plan with a longer policy period will have a higher premium that you may have to pay at the beginning of the policy term. So, keep your budget in mind and choose a policy term accordingly.

3. Family floater:

If you are taking a family floater plan, consider the age, health and insurance needs of your family members while selecting the policy term.

4. Renewability:

Some healthcare plans come with lifetime renewability, while others can only be renewed up to a certain age. Check this factor when deciding on the policy period, especially if you are taking health insurance for a senior citizen.

How to renew a health insurance policy?

You can renew your health insurance policy either online or offline.

To renew your policy online, you must go to your insurance provider’s website, click on the premium payment option, enter your policy number and other details, choose a suitable payment option (debit card, credit card, net banking, etc.) and pay the premium.

For offline payment, you must visit the nearest office of your insurance provider and drop a cheque or use your debit/credit card to make the payment.

Benefits of renewing your health insurance policy on time

Irrespective of the period or tenure of your healthcare plan, make sure you renew it on time for the following benefits:

• Keeping a healthcare plan handy will ensure continuous coverage of your medical expenses.

• There will be only one initial waiting period, and then you can start using the policy benefits.

• You can enjoy an NCB for each claim-free year. For example, some insurance companies offer a discount on premiums for every claim-free year.

• Many health insurance policies come with lifelong renewals, so you can pay policy premiums on time and keep the plan active for as long as you wish. This will save you from the hassles of buying a new healthcare plan every few years.

Conclusion

To sum up, the policy period in health insurance is an important factor to consider when you're buying a healthcare plan. Whether you invest in a 2 crore health insurance plan or one with a lesser sum insured, ask your insurance provider about the available policy period options or check the terms and conditions of various plans and choose a suitable option. Once you buy a healthcare plan, make sure you renew it on time for continuous coverage.

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

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