A 40 year-old man buying health insurance for his 35 year-old wife, and two young children has to spend Rs.20,000 annually to ensure a coverage of Rs.7.5 lakhs. Since most health insurance plans have lifetime renewability, he has to keep paying this premium amount, every year, for the foreseeable future.
Unlike term insurance or endowment plans, health insurance does not come with a fixed payment period; therefore, the burden of paying health insurance premium must be looked at as a lifetime commitment.
Therefore, keep your annual health insurance expense in mind when planning your annual budget, so that you do not have to depend on disposable income. If your annual insurance premium is Rs.20,000 and your due date is in August, that means you must have access to that amount in liquid form by the end of July. Suppose your Diwali bonus comes by October, or the Christmas bonus by December - will you have Rs.20,000 to spare in August?
If you keep aside Rs.4000 for 5 months, you will have Rs.20,000 ready by the time your premium payment is due. Timely planning will make sure that the money you had earmarked for a vacation or a wedding gift is not diverted for the sake of your health insurance.
Having an emergency fund is also a good idea, something most wage-earners already practice. This emergency fund should not be used for paying your premium on a daily basis - it should cover a variety of contingencies (the urgent repair of your car, for example).
Financial experts suggest you to keep up to a month’s necessary expenses in a savings account for immediate access. Three to six months of expense can be kept in a savings-cum-fixed account for bigger emergencies.
In case you do not have ready funds when your annual premium payment is due, withdraw from this source and replenish it once you are at ease financially. If all else fails, consider using your credit card to pay your health insurance premium.
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Failing to pay health insurance premium on time has a number of unique and unpleasant consequences -
Payment through EMI is a feasible alternative for those who struggle with long-term financial planning. Monthly installments reduce the payment into manageable chunks that put less of a strain on your finances.
"It's very useful for a policyholder for whom say Rs.10,000 is a big pinching amount to pay at one go," said Yashish Dahiya, co-founder and CEO of PolicyBazaar.com.
Industry experts believe that EMI allows greater flexibility to insurance seekers in terms of higher insurance coverage. In many cases, people planning to buy individual policies can consider investing in a family floater policy as the investment is easily spread over a longer time period.
We’re sure now you understand how you can easily manage your health insurance premium payments, well in advance, without having to burn midnight oil. Now, it’s time to put the learning into practice. Go ahead! It’s never too late to being your health insurance payments back on track.
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