In its attempt to make insurance customer-friendly and more standardised, the Insurance Regulatory and Development Authority of India (IRDAI) has announced a number of changes in health insurance policies. From now on, customers will have an option of paying their health insurance premiums in various installments. Earlier, health insurance companies used to collect insurance premium on an annual basis. IRDAI has also asked insurers to increase the maximum age limit field for health insurance policies. Usually, the maximum age limit of health insurance policies is up to 65 years.
Now, one has the option of paying health insurance in various installments — monthly, quarterly or half yearly. Terms and conditions of the insurance shall remain unchanged, said IRDAI. However, the free-look period for monthly or quarterly premiums will be lower than what you get while paying annual premiums. The free-look period is a short period in which a new life insurance policy owner can terminate the policy without penalties. Depending on the insurer, a free-look period often lasts 10 or more days.
IRDAI's call to introduce the option of multiple premium payment options is a welcoming change, believes most customers. It will be especially beneficial for senior citizens. Premiums of health insurance is linked to the age of the insurance buyer and gradually increases as the buyer ages. So, opening a new health insurance policy at the age of 60 will cost you more than starting an insurance at the age of 30.
"A customer with age of 60 and above will have to pay a relatively higher premium amount, this could cause a strain in the finances," said Sanjay Datta, Chief – Underwriting, Claims, Reinsurance and Actuary, ICICI Lombard General Insurance Company Ltd.
"Having the option to pay the premium monthly/ quarterly options ensures that the customers are able to pay the premiums and continue to enjoy the benefits of their health policy," Datta added.
IRDAI has allowed insurance companies to increase the maximum age of buying a health insurance. Insurers will also have the option of lowering the minimum age of investing in a health cover.
Health insurance companies can increase or decrease premiums by 15%, caused due to the modifications, based on the loss-ratio numbers said IRDAI. Health insurers are allowed to introduce additional distribution channels for particular products. The insurance companies do not have to wait for regulator's approval.