Buyers pick bigger health cover

First-time health insurance buyers are increasingly choosing big-ticket policies, data from insurance marketplace Policybazaar.com showed, as the coronavirus pandemic heightens health concerns.

As many as 35% of first-time buyers in the past two months chose high-sum insured policies—which offer cover of ₹25 lakh to ₹1 crore—compared with less than 2% last year. Also, among those choosing these plans, around 52% were aged 30-40 years. Among this demographic, only 13% of buyers had pre-existing diseases.

“There is a lot of awareness about health insurance now. Moreover, there is also fear due to covid. Young, healthy people have realized that a critical illness doesn’t only happen to those in the age group of 55-60 years," said Amit Chhabra, head of health insurance at Policybazaar.

The second reason is affordability. “The cost of high-sum insured plans has come down drastically this year. So, from an average premium of around ₹35,000 last year, the price has come down to as low as ₹15,000 for plans with high cover. This affordability meant that people could go for high-sum insured plans," he added.

Flexibility in premium payments has helped as well. For example, under a monthly option, policyholders can pay ₹1,250 each month instead of forking out ₹15,000 in one go. The monthly option was introduced by Irdai in April as a temporary relief for 12 months due to covid. From October, some insurers have also revamped their products with an instalment option built into the policy.

Policybazaar data also showed that 47% of buyers selected a sum insured of ₹25 lakh, ₹30 lakh and ₹50 lakh, while 53% chose ₹1 crore. The demand for single-year policy term was also higher at 62.4%, followed by three years and two years, respectively. Under a multi-year health policy, customers get a cover for more than one year on paying a premium for the full policy term in one go.

“Some people go for multi-year plans, as these come with a substantial discount on the premium. For example, for a two-year plan with a yearly premium of ₹10,000, policyholders can get a discount of around 7.5-10%, which can go up to 15% for a three-year policy," said Chhabra. The data showed that 71% chose to invest in family floater plans with a higher sum insured, while the rest 29% bought the individual cover.

Source: Live Mint