Information on long term health insurance and its benefits

health insurance

Medical expenses have become unaffordable for the common man and given the rising trend of medical inflation, the costs are expected to increase in the coming time. Given the unaffordability of medical expenses, a health insurance policy becomes the most important part of your financial portfolio. The policy covers the medical expenses which are incurred if you or your family member is hospitalised giving you financial relief. These health insurance policies are offered as annual contracts which you need to renew every year for continued coverage. Moreover, with lifelong renewability available under all health insurance plans, if you renew the policies on time, you can enjoy coverage for as long as you live.

While health insurance plans come as an annual contract, there are long term health insurance policies too which provide you continued coverage for a specified duration. Do you know what these long term insurance plans are all about?

What is a long term health insurance policy?

A long term health insurance policy is nothing but a health insurance policy which is offered for two or three consecutive years at once. You are required to pay the aggregate premium for the duration of the coverage at once when you buy the plan and then the long term policy provides continuous coverage for the said duration without the need of annual renewals.

Features of long term insurance plans

 Long term health plans have the following salient features –

  • The policy is issued for a period of two or three years as per your choice
  • The premium is usually payable at once when buying the policy. However, many companies are also allowing the facility of instalment premiums wherein you can avail long term insurance plans by paying premiums in instalments.
  • There is a premium discount when you choose a long term duration
  • The no-claim bonus is added on an annual basis even when you have a long term insurance plan

Long term v/s short term health insurance plans – the pros and cons

Long term insurance plans have both merits and demerits compared to short term health insurance plans. Let’s have a look at what they are –

Pros 

  1. No hassles of annual renewals

    Short term health insurance plans require you to renew them after the end of every year for continuous coverage. This might lead to a possible lapse of the coverage if you forget to renew within the due date. In long term insurance plans, however, there is no hassle of annual renewal. Once you buy the policy, you are secured of the coverage for a continuous tenure of two or three years. 

  2. Less probability of lapse

    Renewing yearly has a high risk of lapse because of the high frequency of renewing year on year. Compared to this, under long term health insurance plans, since the frequency of renewals is reduced, the probability of lapse is also reduced.

  3. Premium discounts

    There is a marked benefit in opting for long term insurance plans as you get a premium discount in choosing a multi-year policy. This discount ranges from 5% to 10% and lowers the effective premium payable for annual health insurance coverage. This discount is not available under short term health insurance plans making their premiums dearer.

Cons

  1. Loss in tax benefit

    When you buy a long term insurance policy and pay the premium at once, you are able to claim a deduction from your taxable income in the year in which you pay the premium. In the next year, since no premium is paid, the tax deduction is lost. So, while in the first year, you can save a higher tax, in the subsequent years, when the policy is running, you lose the tax saving benefit of buying a health insurance policy. Short term plans require annual premiums and therefore, provide annual tax savings on the premiums paid.

  2. Inability to port the policy

    After buying a long term policy, if you are dissatisfied with the plan or the insurance company, you would not be able to port the policy to another insurer for the coverage duration that you have already opted for. This limits portability and you are stuck with the insurance policy for the long term duration that you have selected. Since short term health insurance plans are annual plans, you can port to another policy on renewal if you are not satisfied with the plan that you have bought or the insurance company. 

  3. A higher pocket pinch

    Since you are required to pay the premium of a long term insurance plan upfront when buying the policy, you suffer a higher pocket pinch. Even though the effective annual premium comes out to be lower than the premium payable for a short term plan, the aggregate premium payable might prove to be unaffordable for some.

Benefits of buying long term insurance plans

While the above-mentioned pros and cons highlight the benefits and drawbacks of long term policies, here is a quick guide to the benefits of such health insurance plans –

  1. You are freed from the hassle of renewing the policy every year
  2. You are assured of a long term coverage without the possibility of lapse during the coverage tenure
  3. You can claim a higher tax deduction in the year you buy the long term insurance plan since you pay a higher premium upfront to buy the policy
  4. You can enjoy premium discounts of up to 10% when buying a long term health insurance policy

So, to avoid remembering to renew the policy every year, you can buy long term insurance plans. It would cut down your efforts of maintaining your health insurance coverage and would ensure that you afford the medical expenses suffered in a medical contingency.

How to choose the right long term insurance plan?

There are a variety of long term health insurance plans available in the market. As such, when buying a policy for yourself, you should be careful in the product that you choose. The following factors should be kept in mind when choosing the right long term insurance plan –

  • Choose an all-inclusive scope of coverage

    Different health insurance plans allow different coverage benefits and so you should choose a plan which has the most coverage benefits to cover all medical expenses. A plan with an inclusive scope of coverage would cover maximum medical expenses thereby reducing your out-of-pocket costs.

  • Avoid sub-limits

    Under some long term health insurance plans, there might be sub-limits on room rent. These sub-limits limit the coverage available and if you get admitted in a room with a higher rent, your entire claim amount would be reduced. Thus, opt for plans which have no sub-limits so that you can enjoy maximum coverage from your policy.

  • Check the premiums vis-à-vis coverage 

    It is foolish to compare apples to oranges. Therefore, when comparing health insurance plans, you should always compare the premiums vis-à-vis the coverage offered by the plan. Compare premiums of those plans which offer similar coverage benefits and then choose the policy which allows the lowest premium without compromising on the coverage.

  • Check the network hospital list

    If you want to avail the benefit of cashless treatments, you should be admitted to a hospital which is tied-up with the insurance company. In case of non-networked hospitals, claims are settled through reimbursement which causes an unnecessary financial strain on you. So, before buying a plan, check its list of networked hospitals. If the plan has tie-ups with the hospitals in your vicinity, choose them for availing easy claim settlements.

  • Maximize the discounts

    Long term insurance plans allow attractive premium discounts for choosing long term coverage period, for adding family members, for being healthy, etc. Look for these discounts offered by the different plans and choose a plan which offers the maximum possible discount. The higher the discount that you get the lower would be the premium charged.

    To ensure all these factors are considered, you should always compare and choose the most suitable long term insurance policy for your needs. Also ensure that all your family members are covered under the plan and opt for a sum insured which is sufficient enough to cover the expected medical costs.

Top long term health insurance plans in India

Here is a list of some of the best long term insurance plans available in the market –

Name of the plan

Sum insured 

Coverage tenure

Salient features 

Religare Care

INR 4 lakhs to INR 6 crores

1 year to 3 years

  • Automatic restoration of sum insured in case it gets exhausted on previous claims
  • Coverage for more than 540 day care treatments
  • Range of policy add-ons to enhance the coverage and customize your plan

Manipal Cigna ProHealth Plus 

INR 4.5 lakhs to INR 50 lakhs

1 year to 3 years

  • Provides worldwide coverage in case of emergencies
  • The sum insured is restored if it is used up in earlier claims
  • Coverage for OPD expenses is available through the Health Maintenance Benefit feature

Star Health Family Health Optima

INR 3 lakh to INR 25 lakhs

1 year

  • Air ambulance cover is available under the policy
  • New born baby is covered from the 16th day till the end of the policy term
  • Coverage is available for medical evacuation, compassionate visit and repatriation of remains

National Mediclaim Policy 

INR 50,000 to INR 5 lakhs

1 year

  • Non-allopathic treatments are covered till 20% of the sum insured
  • Pre-determined package rates are fixed for specific treatments thereby lowering the cost of such treatments

Aditya Birla Activ Health Platinum – Enhanced

INR 2 lakhs to INR 2 crores

1 year to 3 years

  • Up to 30% of the premiums can be earned as HealthReturns and you can use this earned premium to off-set the renewal premium
  • OPD coverage is available for chronic illnesses
  • The sum insured is restored if it is exhausted on any previous claim

HDFC Ergo Health Optima Restore

INR 3 lakhs to INR 50 lakhs

1 year or 2 years

  • A daily cash benefit is paid for choosing shared accommodation
  • 100% of the sum insured is restored if it is exhausted
  • 50% of the sum insured is increased after the first claim-free year

How to buy long term insurance plans?

You can buy long term health insurance plans online after comparing the available plans and then choosing the one which is the most suitable. Online policies can be bought at your convenience either from the company’s website or from the website of an insurance aggregator. Turtlemint is also a platform which allows you to buy a long term insurance policy online after comparison. Turtlemint is tied-up with leading health insurance companies giving you the option of some of the best long term health insurance plans available in the market. You can, then, compare the available plans on their coverage benefits and premium rates and then choose a suitable policy. After selecting the policy, you can also buy it online directly from Turtlemint by paying the premium digitally. Once bought, the policy would be issued and you would get the copy of the policy in your email. Turtlemint also helps you with your health insurance claims. In case of a claim you can simply contact Turtlemint and its claim team would help you get your claim settled at the earliest. 

Frequently Asked Questions

  1. Can I switch insurers in a long term insurance plan?

    Switching insurers is called portability and this portability is allowed at the time of renewal when the duration of the policy comes to an end. Thus, in a long term insurance policy, you cannot switch insurance companies during the coverage duration. You would have to wait for the duration to complete after which such switching would be allowed.

  2. Will my no claim bonus be affected in a long term health insurance policy?

    No, there would be no affect in your no claim bonus in a long term insurance policy. The no claim bonus would be allowed after every claim-free year irrespective of whether you have bought a long term health insurance policy or a short term one.

  3. Can senior citizens buy a long term policy?

    Yes, many senior citizen health insurance plans allow long term coverage for senior citizens. You can, therefore, choose such plans to avail long term coverage.

  4. Can I add riders under a long term insurance policy?

    Yes, you can add riders to a long term insurance policy. These riders can be added either at the time of buying a policy or at the time of renewing the policy.

  5. Can a new member be added to the coverage in a long term insurance policy?

    Yes, a new family member can be added to the coverage mid-term in a long term insurance plan. This addition can be done by paying a proportionate additional premium to the insurance company along with a written request to add the member to the coverage.

  6. What happens to the pre-existing waiting period in long term health insurance policies?

    The pre-existing waiting period does not get affected in a long term health insurance plan. The waiting period gets reduced after the completion of each policy year whether you opt for a long term health plan or an annual policy.

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