Ever since COVID-19 entered our lives, health insurance has come to the top of our priority list. Most of us buy annual medical insurance that has to be renewed every year. But did you know that you can enjoy a lot of attractive benefits by buying a multi-year health insurance policy? Read on to know why you should upgrade to multi-year health insurance.
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*Tax benefit is subject to changes in tax laws. Standard T&C Apply
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Multi-year health insurance plans come with a policy tenure of more than a year. They are usually available for a policy term of 2 years or 3 years. Multi-year health insurance plans are more convenient & cost-effective and offer medical coverage for a fixed premium amount.
All health insurance companies in India offer multi-year health insurance plans.
Check out some amazing benefits of multi-year health insurance plans:
Buying a multi-year health plan allows you to take advantage of the long-term policy discount. Most insurance companies offer a health insurance discount of up to 10% on opting for a policy tenure of 2 years. Similarly, you can reduce your premium by up to 15% by choosing a 3-year health insurance policy.
For example, if the premium of your annual health insurance policy is Rs 600, you can reduce it up to Rs 540 per annum with a 10% long-term discount on your 2-year policy. Similarly, if you opt for a multi-year policy of 3 years, you can reduce your premium to Rs 510 per annum with a 15% long-term policy discount.
If you have an annual health insurance plan, you need to renew the policy every year to get medical coverage at all times. If you fail to renew your policy on time, you will lose the coverage and will be left to fend for yourself in case of a medical emergency. Besides, you will also lose the continuity benefits like the served waiting periods and the cumulative benefit if there is a gap in your policy.
But you don’t have to worry about remembering your policy due date every year if you have a multi-year policy. Also, you don’t have to worry about setting money aside to pay the premium every year. All you have to do is pay the premium for 3 years at the time of policy purchase and rest assured for the next couple of years.
Health insurance premiums can rise without any warning, thanks to inflation. Besides, the possibility of a hike in premium also increases as you age and become more susceptible to age-related issues. Moreover, the constant threat of COVID-19 can also lead to the possibility of an increase in the premium.
But if you have a multi-year policy of 3 years, your premium is locked in for those 3 years. No matter how the world changes around you, your insurance company cannot charge you a higher premium for those 3 years. As a result, multi-year health insurance plans save you from annual premium revision and help you to save lots of money.
Just like an annual health policy, you can also pay the premium of your multi-year health insurance policy in instalments. This saves you from the trouble of arranging the premium amount for 3 years in one go.
In fact, insurance companies allow the payment to be made at the frequency of your choice. This means you can choose to pay the premium of your multi-year health policy in annual, semi-annual, quarterly as well as monthly instalments.
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You can also avail tax benefits for a multi-year health insurance policy on the premium amount, just like an annual policy. The premium paid to buy the multi-year policy is deductible under Section 80D of the Income Tax every year but proportionately. This means you can earn tax deductions on a proportionate amount of the total premium every year.
However, make sure to pay the premium amount in any mode other than cash to save on tax. This is because premiums paid in cash cannot be claimed for tax deductions.
As per Section 80D of the Income Tax, you can save tax for up to Rs 25,000 per financial year on the health insurance premiums covering yourself, your spouse and children. In the case of senior citizens, the tax deduction limit increases to up to Rs 50,000 per financial year. Thus, you can earn a multi-year health insurance tax benefit on the premium amount paid to buy the policy.
However, you cannot claim the entire 3-year premium in the same year. As per Income Tax guidelines, you can claim a proportionate amount of the total health insurance premium every financial year.
For example, if the multi-year mediclaim premium paid for 3 years is Rs 54,000, you can claim a tax deduction of Rs 18,000 per financial year for 3 years under Section 80D of the IT Act.
To avoid any confusion, most medical insurance companies provide a tax certificate stating the amount that can be claimed under Sec 80D annually.
A multi-year health insurance policy is beneficial in ways more than one. You not only save a lot of money but also save yourself from the hassle of renewing the policy every year. So, on your next renewal, ditch annual health insurance plans and instead opt for a multi-year health insurance policy.
Also, make sure to compare different health plans online on Policybazaar.com before renewal to get the best deal.
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