In India, only approximately 38% of people have valid health insurance. Most of this population is registered under government insurance schemes. The main reason why private health insurance remains inaccessible to the majority of Indians is the lack of affordability. But steps have been taken to bridge this gap. You can now buy EMI health insurance in India.
Can I Buy Health Insurance on EMI?
Yes, you can buy health insurance on EMI in India. This option was recently introduced in 2019 when the Insurance Regulatory and Development Authority of India (IRDAI) asked insurance providers to provide an EMI option.
You can make payments as a one-time premium or opt for an instalment option. Instalments can be paid monthly, quarterly, or bi-yearly. However, all these options are not open to everyone. It depends on your sum insured and policy details.
How exactly does EMI Medical Insurance work?
There are many misunderstandings about how EMI health insurance works as it is comparatively new to the market. So, let us break it down for you. For instance, your annual insurance premium is ₹20,000. You are not able to make a one-time payment, so you request your policy provider for an instalment option. You can either pay the premium in two instalments of ₹10,000 each or four instalments of ₹5,000 each. Some policies may even give a monthly payment option if the premium amount is large enough.
Benefits of Buying Health Insurance on EMI
Ever since the health insurance EMI option was introduced, several people started considering a purchase. Many people still don't know there are several benefits of buying insurance on EMI.
1. Affordability
The most obvious benefit is affordability. It gets difficult to collect a lump sum premium amount, especially if the amount is large. So, instead, you can collect the amount in parts and pay the insurance company. Even though you are paying a large amount in total, it doesn't feel like a burden since you are paying it in parts.
2. Convenience
Paying EMI is not only affordable but also convenient. You can distribute your finances throughout the year without burning a hole in your pocket for paying the premium. The payment options are also easy enough. You can set an auto-pay on your UPI app. This way, money will be directly debited from your account on the selected date.
3. Tax Benefits
Even though you are paying the premium in part, you can avail of the same tax benefits as a lump sum. As per Section 80D of the Income Tax Act, you can claim tax deductions for all the EMIs of family health insurance paid in that particular financial year
4. Opt for Higher Coverage
Many people would like to have that extra coverage and a higher sum insured for their family. It's not always possible due to the high premium amount. But now with the EMI option on the table, you could consider the upgrade. You can pay the premium in parts, so even the higher amount won't feel like too much.
5. Benefits for Senior Citizens
Senior citizens require extensive coverage in their insurance plans. Also, the premiums for senior citizen health insurance are usually higher as their medical needs are more prominent. Senior citizens don't have a source of income. They are either living off their savings or on pension. They can't afford to pay a large sum. However, they can buy health insurance on EMI and make monthly payments.
Drawbacks of Buying Health Insurance on EMI
While the EMI option is very tempting, it does have some disadvantages. People don't usually take these into consideration while opting for EMI health insurance. You do the math - you'll notice that even though EMI seems affordable, you end up paying more than intended.
1. Paying Extra Premium
When you buy a mobile on Amazon, you must notice the EMI option. The total amount paid with EMI is always higher than the lump sum. The same applies to health insurance. You end up paying an extra premium than you would have needed only because you chose to pay it in instalments.
2. Probable Higher Sum Insured Requirement
The EMI option is not available for everyone. If your sum insured is less or for a single person, you probably won't get the option of paying in instalments. Insurance companies might prompt you to choose a higher sum insured to avail of the EMI option. So, you might end up buying more coverage than you actually need.
3. Missing Out on Discounts
Insurance policies have discounts or sales at some times. These discounts can only be availed if you pay the premium in a lump sum. You don't get the discount for EMI payments. So, again, you end up paying more than required.
4. Waiting Period on Claims
Some insurance policies have a waiting period for the insurance to kick in. Generally, it is one month from the date of purchase. But if you are paying the premium in instalments, you might have to pay a fixed number of instalments before the insurance kicks in.
For instance, you might have to pay at least three monthly instalments to start enjoying the benefits of your policy. Which means you are not covered for three months.
Conclusion
Buying health insurance on EMI is an excellent option if you do not have the funds for a one-time payment. But in the longer run, you end up paying more than required when you opt for EMI.
So, this is a very good option only when you absolutely cannot manage to pay the lump sum premium but want to avail the benefits of a health insurance policy.
FAQ
Can I cancel health insurance after payment?
No, you cannot cancel health insurance after paying the premium. You can choose to discontinue from the next year. But for that particular year, you can avail all the benefits of your insurance plan.
What happens if I stop paying my insurance?
If you stop paying your health insurance EMI, the insurance provider could stop delivering their services. If you make a claim, you will be first asked to clear your dues. If you do not pay the EMI within the allotted time, the insurance provider holds the right to cancel your policy. You won't get any refund on the EMIs you have already paid.
Do you get a refund if you cancel your insurance?
No, you usually do not get a refund if you cancel your health insurance after paying a few instalments. However, in rare circumstances, the insurance provider can grant you a partial refund if the reason for cancellation is valid enough.
