Medical inflation in India is expected to reach 11 per cent in 2024, up from 9.6 per cent in 2023, according to an international survey by brokerage firm Mercer and Marsh Benefits in December last year. The study underscores the importance of a health insurance plan for financial preparedness during a medical emergency as medical costs soar in India. Given the growing importance of health insurance, should senior citizens opt for a multi-year health insurance policy to avoid the hassle of renewing the plan annually? In a multi-year strategy, the policyholder can pay the premium for two to three years in one go. Health insurance is vital as you age because it will cover your medical expenses when you need them.

Here are key benefits of a multi-year policy:

No Need To Pay Premiums Annually: In a multi-year health insurance policy, the customer can pay the premiums for multiple years in one go. Customers’ don’t require remembering the renewal dates or risk forgetting premium deadlines, allowing senior citizens convenience.

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Discounts on Premium: Buying a multi-year policy will help you save in premiums. Many health insurers provide discounts on a multi-year health plan, ranging from five to 15 per cent. Also, the customer can benefit from not having to pay the hike in premiums with the increasing age every year. If they buy the policy in one go for several years, the premium amount will remain the same. So, an upfront payment means saving on premiums every year.

Tax Benefits: Additionally, a multi-year plan will offer tax benefits throughout the policy term. Senior citizens can claim tax benefits of up to Rs 50,000 for health insurance annual premiums under section 80D of the Income-tax Act, 1961. The premium is proportionately divided across policy years for tax benefits. For instance, if the premium under a multi-year policy for two years is Rs 1 lakh, the policyholder will get a tax relief of Rs 50,000 annually. Besides, insurers provide the policyholders a certificate, indicating the premium eligible for tax benefits annually.

Is Multi-Year Health Insurance A Prudent Choice For Seniors?

Kavitha Menon, a Securities and Exchange Board of India (Sebi)-registered investment advisor (RIA), says, “In a multi-year policy, insurers generally offer a discount. Additionally, there is protection from any increase in premiums. Insurance premiums don’t just rise with inflation. Change in age can cause a significant increase in medical insurance premium. Multi-year policies protect you from these big increases in premiums.”

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She adds that before buying a single premium multi-year policy or an annual policy, seniors must not forget to check the exclusions, expense ceilings, list of hospitals etc. Health insurance is vital in retirement planning. Finally, if you can afford a single-premium multi-year policy, go for it. However, note that after buying the plan, if you are dissatisfied with the policy, there is no option to port the plan to another insurer before its term ends. Therefore, it is imperative to exercise caution while choosing a multi-year policy or an insurance company.