Rising Health Insurance Costs Lead 1 In 10 Policyholders to Forgo Renewal

Healthcare costs are climbing at an unprecedented rate, and the rising health insurance premiums are making policyholders rethink their decisions about policy renewal. Many people are forgoing their individual health insurance renewal, leaving them vulnerable to unexpected medical expenses, while others are hesitant to buy health insurance due to affordability concerns.

Why are Health Insurance Premiums Increasing?

1. Rising Medical Inflation

Healthcare inflation in India is significantly outpacing general inflation. With medical costs rising by nearly 14% annually, insurers must adjust their premiums to keep up with increased claims. From hospitalisation charges to diagnostic tests and surgeries, everything is getting costlier, directly impacting health insurance premiums.

2. Higher Claim Ratios

With an increase in healthcare awareness and accessibility, more people are utilising their insurance benefits. This has resulted in higher claim ratios. Insurers must balance their risk pools by increasing premiums to compensate for the rising number of payouts.

3. Advanced Medical Treatments

While medical advancements improve patient outcomes, they also drive up costs. Treatments such as robotic surgeries, personalised medicines, and specialised therapies contribute to higher hospital bills, increasing insurance premiums accordingly. The cost of research, technology, and highly skilled medical professionals further adds to the growing expense.

4. Increased Lifestyle Diseases

Modern-day lifestyles, including unhealthy eating habits, lack of exercise, and stress, have led to a surge in non-communicable diseases like diabetes, heart disease, and hypertension. As these illnesses require ongoing treatment and medication, insurers face a higher volume of claims, leading to an increase in premiums.

5. Growing Demand for Comprehensive Coverage

People are increasingly opting for comprehensive individual health insurance plans that cover a wide range of medical expenses, including OPD consultations, wellness programmes, and preventive healthcare. While this is beneficial, it also leads to a higher cost burden on insurers, ultimately reflecting in premium hikes.

The Consequences of Skipping Health Insurance Renewal

1. Financial Burden

Without health insurance, you are responsible for paying out-of-pocket for medical expenses. A single hospitalisation can lead to hefty bills that could drain your savings. Skipping renewal leaves you vulnerable to unexpected medical emergencies that could have been covered by insurance.

2. No Coverage for Critical Illnesses

Many policies include coverage for critical illnesses such as cancer, kidney failure, or organ transplants. If you skip renewal, you lose access to these benefits, which could lead to severe financial strain in case of a medical crisis.

3. Loss of Continuity Benefits

Most policies offer continuity benefits, such as no-claim bonuses and waiting period reductions for pre-existing conditions. If you let your policy lapse, you lose these benefits and may have to start over when purchasing a new plan.

4. Difficulty in Reapplying

Skipping renewal might mean undergoing medical tests again, and in some cases, insurers might deny coverage based on new health conditions. If you develop a medical condition during the lapse period, you may find it harder or more expensive to get insured again.

5. Higher Premiums on New Policies

When you skip renewal and later decide to buy a new policy, you may face increased premiums due to age-related factors or changes in health status. Insurers charge higher premiums for older individuals and those with pre-existing conditions, making it costlier in the long run.

How to Manage Rising Health Insurance Costs

1. Compare Policies Before Renewal

Before deciding to skip renewal, compare different individual health insurance policies. You may find an alternative with similar coverage at a lower premium.

2. Opt for Higher Deductibles

Choosing a policy with a higher deductible can reduce your premium costs. This means you pay a portion of medical expenses before insurance kicks in, but your overall premium remains lower. This is a great option for individuals who do not expect frequent medical expenses but want coverage for major hospitalisation costs.

3. Customise Your Policy

If you find premiums unaffordable, consider removing optional add-ons that you don’t need. Many insurers allow policyholders to tailor coverage to suit their financial capacity. Focus on essential coverage and avoid unnecessary riders that increase the premium.

4. Look for Discounted Family Plans

Instead of purchasing separate policies for each family member, consider a comprehensive health insurance plan that covers the entire family. This could be more cost-effective than multiple individual policies.

5. Use a No-Claim Bonus (NCB)

If you haven’t made any claims, you may be eligible for an NCB discount, which can lower your renewal premium. Check with your insurer before renewing. No-claim bonuses can significantly reduce costs while maintaining coverage.

6. Opt for a Long-Term Policy

Many insurers offer discounts for long-term policies (2-3 years). If you can afford the upfront cost, this could be a cost-effective way to secure coverage at a lower rate. Locking in a premium for multiple years can help avoid future price hikes.

7. Take Advantage of Employer Insurance

If your employer offers a group health insurance plan, consider taking advantage of it. While these plans may not provide extensive coverage, they can serve as a backup while you maintain a basic individual policy.

8. Stay Healthy and Reduce Risks

Leading a healthy lifestyle can reduce your risk of chronic illnesses and medical emergencies, lowering your chances of making insurance claims. Insurers often offer wellness programmes and discounts for policyholders who actively maintain good health.

Conclusion

Skipping health insurance renewal due to high costs can leave you vulnerable to financial burdens and unexpected medical emergencies. While rising premiums are a concern, there are ways to manage costs and ensure continued coverage. Comparing plans, opting for deductible-based policies, and utilising discounts can help policyholders navigate rising costs effectively. Instead of foregoing renewal, consider adjusting your plan to fit your budget while maintaining essential coverage.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

Note to the reader: This article is part of Hindustan Times's paid consumer connect initiative and is independently created by the brand. Hindustan Times assumes no editorial responsibility for the content, including its accuracy, completeness, or any errors or omissions. Readers are advised to verify all information independently.