What Is Long Term Health Insurance – An Introduction

Long term health insurance policies – an introduction

22 May 2019

Here’s a fact that can never change – all of us are going to grow older and our health will not remain the same when we do. Old age brings with it a lot of health issues. There comes a time when we cannot even look after ourselves well enough. If we are not smart about taking care of our health while we are younger, we may even end up being a burden on our loved ones. As such, everything we can do to not end up in this situation, we should do, when we have time ahead of us, and money to insure our health. This is perhaps the reason why the Insurance Regulatory and Development Authority of India (IRDAI) took a cue from western countries and introduced long term health insurance. Let’s find out what is long term health insurance

What is long term health insurance?

As the name suggests, long term health insurance policy is simply a type of health insurance policy. Unlike a regular health insurance policy that requires annual renewal, long term health insurance policy typically comes with a minimum tenure of 2 to 3 years. This type of health policy is nothing but an alternative to the average, year-long validity health policy.

What does long term health insurance cover?

Long term health policies typically cover the cost of hospitalisation in case one needs to be hospitalised for a longer duration. It also helps reduce costs associated with living in an assisted living or home assistance facility due to a prolonged illness. Such a policy typically comes to your aid when you have no one to look after you or take care of you, while you are also not in a position to look after yourself physically.

Why and when should I buy long term health insurance?

That the cost of medical expenses is increasing with every passing year is no hidden secret. In the last few years, it has been reported that the cost of health-care has been on an upward trajectory with a 15% inflation rate, annually. As such, it is best to invest in a long-term health care policy as soon as possible.

While you can continue paying premiums for your regular health insurance policies until the age of 50, the moment you reach this mile-stone, you should start investing in long-term insurance policies, because your 60s are a time when chronic illnesses begin to crop-up out of nowhere. Also, most insurance companies do not prefer to provide long-term health insurance policies when one enters their retirement years. This is attributed to the fact that senior citizens are generally considered as high risk customers since their health is more likely to start deteriorating once they enter their 60s.

Reasons to consider a long-term health insurance policy

Now that you know what is long term health insurance, let’s look at the essential reasons why you should consider investing in this type of policy.

One of the most common reasons why people prefer to invest in long-term insurance is that you do not have to go through the hassle of renewing your policy every single year, nor do you have to worry about your policy lapsing or losing out on the no-claims bonus.

Since long term health insurance policies comes with a longer validity, the policy holder is also likely to gain the benefit of discounted premiums as compared to when one purchases a policy with a 1 year validity.

Also, locking in your insurance plan for a period of 3 years makes the policy holder immune to premium rate revisions that may happen during this period. As mentioned above, with the annual inflation associated with the health care industry, most health insurance providers are increasing premium rates with every passing year.

Final Words

The IRDAI has also issued a regulation that makes insurance companies provide the No-claims bonus benefit to long term health insurance policy holders as well. The no-claims bonus slabs are fixed by the IRDAI and the policy holder can receive these benefits in the guise of claim-related concessions. For instance, insurance companies may offer bonuses for every claim-free year even in the case of policies lasting for three years.

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Long term health insurance policies – an introduction

22 May 2019