Rising health insurance premiums have become one of the biggest concerns for policyholders in recent years. Almost every day, social media is filled with posts from people wondering why their renewal premium has gone up despite making no claims. Some are seeing increases of 20-30 per cent, while others are reporting much sharper jumps.
What has added to policyholders’ concerns is that GST on health insurance was removed last year in September. Many people expected this to bring meaningful relief. Instead, renewal premiums continue to rise.
So, what is happening? If GST has already been removed, why are premiums still increasing?
Well, the answer is simple: GST was only one component of the premium. The larger drivers of premium increases continue to remain. Health insurance is not a fixed-price product. Insurers can revise premiums for an entire product if the cost of providing coverage under that product increases. These revisions are typically applied to all policyholders in that product and not just those who have made claims.
Why your renewal premium may increase:
- You may have moved into a higher age group
Most insurers calculate premiums based on age bands. For example, one premium may apply to people between 31 and 35 years of age, another to those between 36 and 40, and so on. When you move from one band to the next, the premium can increase significantly. This is why many policyholders see a sudden jump in premiums even though nothing else has changed.
- Hospital bills are getting costlier
Healthcare costs are rising every year. Hospital rooms, tests, medicines, doctor fees, surgeries and other related costs are all becoming more expensive. So even if you have never made a claim, the cost of treating an illness has gone up. Insurers also have to pay higher claim amounts. That eventually reflects in premiums.
Also read: Is it better to buy separate health insurance for your parents or include them in your family floater?
- The product itself may have been repriced
Health insurance works on pooling. Many people buy the same plan and pay premiums into one pool. Claims are paid from this pool, and premiums are calculated based on the overall experience of that group. If claims under that plan increase overall, the insurer may increase premiums for everyone in that plan. This means your premium can increase even if you have never made a claim.
What can you do if your renewal premium has increased?
Reducing the sum insured is one of the most common responses to a premium hike. For example, someone with a Rs 10 lakh cover may reduce it to Rs 5 lakh to keep the premium manageable. While this reduces the cost today, it also reduces your protection at a time when healthcare costs are rising rapidly. A cover that looked enough a few years ago may not be enough today. Reducing your cover may save on premium now, but it can leave you short during a serious hospitalisation.
So, before you renew or make any changes to your policy, first understand why the premium has increased and what options are available to manage it without weakening your protection.
- Understand exactly what changed
Start by asking the insurer for a detailed premium break-up. Check whether the increase is because of an age-band change, product repricing, add-on covers or any other factor. Many policyholders never ask these questions. However, understanding the reason behind the increase can help you identify whether there is any scope for review.
- Check whether any loading can be reviewed
Some policyholders pay a higher premium because of a medical condition disclosed at the time of purchase. If that condition is now under control or has significantly improved, it may be worth asking the insurer to review the loading. Share updated medical records with them. The insurer may or may not reduce it, but it is worth asking.
- Consider porting, but with caution
Portability can be explored if your current premium has become too high, and waiting period credits are generally carried forward subject to the new insurer’s approval. But premium should not be the only reason to move. Check the cover, exclusions, limits, room rent and all other factors before switching. A cheaper plan is useful only if it still protects you well.
- Explore deductible options
A deductible is the amount you agree to pay from your own pocket before the insurer starts paying a claim. For example, if you choose a Rs 25000 deductible and your hospital bill is Rs 2 lakh, you pay the first Rs 25,000 and the insurer pays the remaining amount. Since you are sharing a small part of the risk, the insurer may offer a lower premium. For example, choosing a Rs 25,000 deductible on a Rs 10 lakh health insurance cover can reduce the premium by around 20-25 percent.
Insurers may offer deductible options. But check the type of deductible carefully. An annual aggregate deductible is usually better because it looks at the total of all hospitalisation claims made during the policy year. Once you have paid the deductible amount for the year, the insurer starts paying eligible claims as per the policy terms. In a per-claim deductible, the deductible applies separately every time you make a claim.
- Use a Super top-up to plan for the long run
When premiums rise, most people only think about reducing this year’s renewal amount. But health insurance needs a longer view. Healthcare costs are rising, and your premium will also increase as you grow older. So the real question is not just whether you can afford the policy today, but whether you can continue it 10 or 15 years from now.
One way to manage this is to split your cover into two parts: a smaller base policy and a large super top-up. For example, if you want Rs 1 Crore of total health cover, you may not need a Rs 1 Crore base policy. You can consider a Rs 10 lakh base policy and a Rs 90 lakh super top-up. The base policy can take care of smaller hospital bills. The super top-up can step in for large hospital bills that cross Rs 10 lakh.
This approach can also make sense in the long run. Over time, as your savings and investments grow, you may be able to pay the first Rs 10 lakh from your own pocket. At that stage, you may choose to drop the Rs 10 lakh base cover and continue only with the super top-up for bigger hospital bills.
