Health Insurance Premium Calculator: Age 30 years, insurance amount Rs 10 lakh; which option can save up to 18% amount- 1-year premium policy or multi-year policy?

Health Insurance Premium Calculation: When we talk about health treatment cost in India, there are 3 factors to consider: health inflation, retail inflation, and salary increase.

While annnual health inflation is 14 per cent, retail inflation is 6 per cent. But in stark contrast to these two, annual salary increments are in the range of 3 per cent to slightly over 9 per cent.

It means a large population will find it increasingly difficult to meet health inflation, let alone beat it.

Amid such a backdrop, the importance of having a health insurance policy comes to the fore. 

"While retail inflation remains around 6-7%, medical inflation has surged to an alarming 14%, underscoring the urgent need for health insurance as a safeguard against the escalating costs of advanced healthcare," says Siddharth Singhal, Head, Health Insurance, Policybazaar. 

"In metropolitan areas, the cost of tertiary treatments, such as cardiac surgeries, cancer care, and organ transplants, often ranges between Rs 3 to Rs 12 lakh or more, imposing significant financial burdens," he added. 

In health insurance, the cost of delay can hurt severely. First, the health insurance premium gets costlier for a person in their 40s than a person in their 20s.

Second, the higher the age, the fewer are chances to get a health insurance policy because the insurance companies consider factors such as the age, pre-existing diseases, terminal illnesses, etc. before issuing a policy.

When one applies for health insurance in their mid 20s or early 30s, not only can they get it easily, but their premium will also be quite less than the premium offered to a person in their 40s. 

When we talk about premiums, the traditional way is to charge an annual premium, where one can pay it in one go or in installments.

The new trend is to have multi-year premiums where one can pay premiums up to 5 years in lump sums or instalments.

But is it worth it? Who should go for it? How much money can it save compared to 1-year premium plans?   

To get a clear picture, we compare the 1-year and multi-year premium amounts charged by leading companies for a 30-year-old Delhi resident who wants to have a Rs 10 lakh health insurance policy.

"Going for multi-year health insurance policies is a smart financial move, especially for young individuals looking to offset rising healthcare costs. By locking in a fixed premium rate for up to five years, policyholders can safeguard themselves against medical inflation and premium hikes. Youngsters, with their relatively lower health risks, can secure affordable rates and benefit from savings of up to 17-18% through multi-year discounts, says Singhal. 

Health premium comparison chart

Chart Courtesy: Policybazaar.com

Here, one can see a plan with an annual premium of Rs 8,667 over a period of 5 years would cost Rs 43,335. But if one goes for a multi-year plan of 5 years, they will only have to pay Rs 38,785.