More people porting their health insurance plans for enhanced coverage

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 renaissance. Since the last one 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 hospitalisation 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 hospitalisation 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 hospitalisation 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.

Though it is good that a great number of people bought health insurance in the last year, there is another side to the story. With a rise in the sale of health insurance, there was also a massive rise in “panic buying” with many people buying health products without giving due consideration to some important factors like sum insured, room-rent limit, co-payment and waiting period. Many people bought health insurance plans just to ensure adequate coverage against the ongoing pandemic – COVID-19 without worrying about other diseases and aspects as well. This is further supported by a report by Swiss Re that states that Indian consumers were second most active in the Asia-Pacific region in seeking health insurance during the COVID-19, driven by financial concerns.

Prominent reasons people switching to higher cover policies
Interestingly, since the last 2 months, there have been some exciting consumer trends that showcase how people are becoming more informed in their decisions and are taking necessary precautions to make their health covers more comprehensive.

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 most people are porting their existing plans to Rs 1 crore sum insured health insurance plans. 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.

Some prominent features include zero co-payment – wherein the customer does not need to pay any portion of the hospital bill and no room-rent limit so that customers can avail of any room category during the hospitalisation for treatment of any ailment. With regular plans, customers could not choose a room category of their choice and had to compromise with the limited options available.

Another important reason, why most people are porting to 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 of all the benefits. The easy monthly instalment option has increased the affordability of higher sum insured plans significantly amongst middle-class families.

Most people are also porting their health insurance policies as initially during the COVID-19 outbreak, people bought health cover in a panic without worrying about their pre-existing conditions. Most regular health plans come with a pre-defined waiting period of 2 – 4 years, that means before availing coverage for your pre-existing condition, you need to serve a waiting period. However, today, there are plans in the market that come with a zero-day waiting period for some of the most common pre-existing ailments like diabetes, hypertension, asthma and even some critical illnesses like cardiovascular diseases and cancer. In the last few months, a majority of people suffering from pre-existing conditions have ported their health plans to covers with zero-waiting period policies.

The author is Head-Health Insurance at Policybazaar.com. Views expressed are that of the author.