COVID-19: Health Insurance Premiums Can Now Be Paid In Installments

Providing major relief to the policyholders in these unprecedented times of COVID-19 outbreak, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurers to collect health insurance premiums in installments on policies due to renewals up to March 31, 2021.

Policyholders can now pay their health insurance premiums on a monthly, quarterly, half-yearly, or annual basis. Generally, health insurance premiums are paid on an annual basis, unlike life insurance where multiple payment options are available. In September last year, IRDAI had permitted insurers to add installment options for payments of premium.

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Insurers had to implement this installment facility by October 2020 as per the circular. However, with the outbreak of the pandemic, the regulator has issued a notification to provide the facility on an immediate basis. 

A circular issued by the regulator on April 22, 2020, says that “in view of prevailing conditions owing to COVID-19 outbreak, considering the need for easing the payment of health insurance premiums, all the insurers are allowed to collect health insurance premiums in installments”.

Amit Chhabra, Head of Health Insurance at Policybazaar says, “this is a welcome move by the regulator. Consumers who would find it difficult to renew their health insurance plans or buy a new one earlier can now easily afford it. For instance, rather than paying an upfront premium of Rs 20,000 annually, it will be easier for a policyholder to pay Rs 1650 per month.”

The circular also said, “there shall be no change in the basic premium table and charging structure under the approved individual product to which new premium payment mode (frequency) is being added”.

Outside India, Hong Kong offers both monthly and annual premium payment options; while countries such as Taiwan, UK, and the US offer monthly payment options. Taiwan and Hong Kong have the highest penetration of insurance in the world.