In the last few months, it was tracked that people, who were delaying purchase, have finally started to invest in health insurance with an adequate sum. Thanks to Equated Monthly Instalment (EMI) option offered by general and specialised health insurers as per directions of Insurance Regulatory and Development Authority of India (IRDAI).
With the new guidelines in place, customers now pay their premium annually along with easy monthly instalments. With the ongoing pandemic, this option is a big relief for people who recently lost their jobs or have undergone pay-cuts but are struggling to protect themselves and their families under a comprehensive health plan.
As per the market trends, about 40 to 45 per cent first-time health insurance buyers are choosing the monthly payment mode for paying the premiums. Many insurers have reported that 65 per cent of their health insurance business has shifted to online after EMI option was rolled out.
An important reason why almost every second person buying a health insurance cover in the last three months is choosing the monthly payment mode is because the average annual premium range in India is between Rs 8,000 to Rs 18,000. While this figure (annual premium) may look big, the average premium comes around Rs 670 to Rs 1,500 and is easier to pay.
Further, about 40 per cent of the population who are buying health cover since the last few months are opting for a cover with Rs 5 to Rs 10 lakh sum insured, while another 40 per cent are opting for a cover with a sum insured ranging between Rs 25 lakh to Rs 1 crore.
Yet another prominent trend worth noticing is that over 70 per cent of the customers are opting for family floater plans. With this, it can be said that the EMI option for paying health insurance premium is helping in increasing the health insurance penetration rate and distribution of insurance products in India.
One of the biggest advantages of rolling out the EMI option in health insurance premium is an increase in affordability. Smaller premiums will allow people to invest in health insurance covers with higher sums for adequate coverage of the family.
The monthly premium payment option is also proving beneficial to senior citizens. The premium is generally very high and with EMI options, they can pay in monthly instalments.
Insurers are allowed to marginally increase the total premium if the policyholder opts for monthly the premium payment option instead of annual premium payment. The increase in premium may vary with every plan or insurer.
The author is Head-Health Insurance, Policybazaar.com