Updated: July 7, 2021 6:08:33 pm
Written by Amit Chhabra
Ever since the outbreak of the COVID-19 pandemic in the month of March last year, the health insurance business in India is experiencing a much-awaited revolution. Since the last year, customers have been investing in health insurance in elevated numbers as every day thousands of people continue to test positive for COVID-19 across various parts of the globe. The upsurge in the sale of health insurance policies seems logical given the core objective of health insurance; cover hospitalization expenses for treatment of Covid-19 or any other ailment.
Buying a health insurance policy for yourself and your family is important not just for protection against the pandemic but all other diseases as well because medical care is quite expensive, especially in the private sector. One-time hospitalization can burn a hole in your pocket and derail your finances if you do not have a health insurance plan in place. You can avoid all this by just paying a small annual premium against a health insurance plan.
In the last 12 months, most of the insurers selling health insurance plans in India have reported an uptick of up to 40 per cent in the sales of health plans. This is mostly because the awareness around health insurance has increased by manifolds. In addition, the importance of being financially prepared against any unforeseen medical expenses is on top of the mind of the consumers.
With the media reports filled with instances of hospitalization bills for COVID-19 treatment crossing several lakhs, people are well aware that good health is not something that they can take for granted anymore.
In the last few months, the number of people porting their health insurance policy to the higher sum insured covered has increased from 30 per cent in the months of March-May 2020 to 80 per cent now – from March-May 2021. Out of all the customers porting their policies, 48 per cent were between the age group of 30-45, followed by the age group 45-60 which stood at 25 per cent.
People who bought health insurance covers with minimum sum insured – mostly between Rs 5 lakh – 10 lakh are now enhancing their covers by porting into health policies with higher sum insured. The available trends show that 40 per cent of customers ported to a cover higher than Rs 25 lakh, while 18 per cent ported to Rs 10 lakh – 25 lakh cover.
The average cover customers are buying this year is around Rs 25 lakh, which has almost doubled compared to the previous year. This is mostly because health plans with Rs 1 crore sum insured are now available at almost the same price as Rs 10 lakh health cover. For a 30-year old individual, while Rs 10 lakh cover costs Rs 600 – Rs 800 per month, for the same customer Rs 1 crore sum insured health plan costs Rs 800 – Rs 1,000 per month. By just paying Rs 200 – Rs 400 more, customers can now get much-enhanced coverage with a plethora of added features.
Another important reason, why most people are porting to the higher sum insured covers, is that customers now have the option of paying the premiums in easy monthly installments in place of the lump-sum amount at one go. This means, instead of paying Rs 12,000 as a lump sum for Rs 1 crore sum insured cover, customers can pay Rs 1,000 per month for the plan and still avail all the benefits.
The easy monthly installment option has increased the affordability of higher sum insured plans significantly amongst middle-class families. Another prominent reason why people are porting their health policies is due to the mandatory co-payment clause and room-rent capping in health insurance policies. Over the last one year, 35 per cent of customers ported their policy due to room-rent capping and co-payment. By porting their policies, customers have the option of selecting the room category of their choice during hospitalisation and they do not have to bear any expenses from the hospital bill with zero co-payment feature.
Another interesting trend being observed since the last few months is that people who bought Covid-specific policies like Corona Kavach and Corona Rakshak last year are now porting to comprehensive health insurance plans. Until now, over 20 per cent of Covid policy buyers have moved into comprehensive plans.
Customers are slowly realising the fact that comprehensive plans will give them complete protection against hospitalisation not just due to Covid-19 but other illnesses as well. Out of all the customers who ported their Covid-specific policies into comprehensive, 43 per cent belong to the age group of 30–45 years, followed by 30 per cent of those who are less than 30 years of age.
With the intervention of the insurance regulator, for the benefit of the customers, the porting process has been made very smooth and you can easily switch your insurer online if you are unhappy with the current insurer and wish to port to a better policy. By following few simple steps, you can port from one insurer to another.
With the several changes in the underwriting rules, customers do not need to serve a fresh waiting period when porting the insurer and also all other benefits like No-Claim Bonus continue to work without any break.
The author is Head-Health Insurance at Policybazaar.com. Views expressed are that of the author.
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