Page 49 - Insurance Times May 2024

Health plans: Is it wise to

opt for monthly

payments?

I nsurers have started promoting monthly and quarterly aggregate basis, "The overall premium outgo in the monthly

or quarterly option could be 3-4% higher than the annual
premium payment modes in an effort to make health
option, but some insurance companies do not charge extra,"
plans affordable for all. Besides, they are also offering
zero cost EMI (equated monthly instalment) options
now. The idea seems to be appealing for many. Data says Singhal.
obtained from insurance distributor Policybazaar shows that How hospitalization works Consider a scenario where you
33% of young salaried individuals (aged 26 to 35) prefer the have paid four monthly premiums. In case you are
monthly payment mode when purchasing such a policy for hospitalized in the fifth month, the insurer will deduct the
the first time. Interestingly, the trend is more pronounced premiums for the remaining 8 months from the approved
in tier-III regions, where 44% of individuals have opted for claims amount before settling the claim. What if the claims
monthly payments, compared to 31% in tier-2 cities and only amount is lower than accumulated premiums so far? You
23% in metros. will still have to pay residual premiums before the claim is
settled.
While monthly and quarterly payment options help people in
managing their cash flows, financial advisers have warned of "One of my clients had outstanding premiums that was
the risks involved. Swapnil Satish S., senior insurance advisor greater than the claim amount. The insurer denied the claim
at Ditto Insurance, relates the experience of one of his clients, for this reason. They had to pay the balance amount from
who opted for the monthly option for his parents' insurance their pockets," said Nisha Sanghavi, founder of Promore
policy. The premium amount was to be auto debited from his Fintech. "Most of my clients come and say they want to buy
debit card every month. "Due to some strictures issued by the monthly plan but aren't sure of the caveats"
the bank regulator on card payments, the auto-debit failed.
My client realized this 25 days after the due date. The policy, If you are indeed going for the monthly option, here are two
however, could not be revived and he had to buy a new things to keep in mind. "Link your payments with your main
policy. In the process, his parents lost all continuity benefits bank account and not credit or debit cards because in case
available on the earlier policy," he says. your card expires, you may miss the payment. Secondly,
ensure that your own phone number is registered with the
To be sure, insurance companies offer a grace period of 15 insurance company because you will miss reminders from
days from the payment due date during which you can make the insurance company," says Mahavir Chopra, founder,
the payment. Once the grace period is over, your policy will Beshak.org.
lapse and you will have to buy a fresh policy altogether. "In
case you get hospitalized during the grace period, the Monthly and quarterly options do offer convenience but
insurance company will not be liable to accept your claim," come with hassles. Opt for it only if you can actively ensure
says Siddharth Singhal, business head-health insurance, timely payments. Insurance experts said that delay in the
Policybazaar.com. monthly payments also affect one's credit score. Another
thing to watch out is the processing fee levied on each EMI
Also be aware that you might end up paying higher on an transaction. (Refer to Mint)

The Insurance Times May 2024 45