Buying health insurance early has considerable advantages in terms of cost efficiency and flexibility. But many buy it much later and end up paying too much. The reasons for late buying could be genuine as well as illogical. Genuine reasons could be the possibility of a lack of stable employment early on. As a result, paying the premium spotlessly may be very difficult to ensure. Whereas some think that buying health insurance isn’t important because it comes into play only when one faces a medical emergency. The incidence of falling sick at a young age may be too low, making you wonder whether the premium payment for something which is not sure to happen is worth your money.
All those thinking that way can learn from the hard lessons taught to all of us by the COVID pandemic. Hospital bills soared by 35-40% across major locations even if people were admitted for the treatment of diseases other than COVID. Imagine the scenario when COVID patients were getting treated. How much would the cost have escalated then? Let’s check how much of a disadvantage you’ve when buying health insurance late.
So, What’s the Loss in Buying Health Insurance Late?
Buying health insurance late will push up your premiums substantially, reduce your coverage, make you go for pre-policy medical tests, etc. You can read about these limitations in detail below.
Premiums Rise Incredibly High
Health insurance premiums are based on the age of an individual. The more later you buy the policy, the higher the premium will be and vice versa. As health conditions are likely to worsen as you grow older, insurance companies raise your premium. For example, if A buys health insurance of INR 5 lakh at 25 years of age, the annual premium would amount to INR 8,000-10,000. Whereas B aged 40 applying for the same coverage amount of INR 5 lakh would most likely have to pay double the premium of A. However, the premium for both won’t remain the same throughout the policy period. Yes, insurance companies come with different age slabs of five years. The moment you enter into a new five-year slab, the premium will go up. Even then, an early buy of insurance leads to a much lower payment compared to when doing so later.
Coverage Amount May Reduce on Buying Health Insurance at an Older Age
As the scope for falling sick remains higher at an older age, the underwriters of the insurance company could offer you a lower coverage amount. The greater frequency of falling sick would lead to regular claims, making insurers disburse the treatment expenses regularly. All that could force insurers to decrease your coverage amount.
Pre-policy Medical Test Obligation
Most insurance companies permit individuals aged up to 45 years to buy health insurance plans without a medical test. So, people aged above 45 will need to undergo a pre-policy medical test. In case the test reveals some illnesses or weak health, insurance companies can raise the premiums.
Co-payment Clause When Buying Health Insurance Late
People aged above 45 have to mandatorily sign a co-payment clause while buying health insurance. It means the policyholders would need to pay a certain percentage of the treatment expenses before the insurer pays the remaining amount. Most insurers come with a mandatory 10% co-payment obligation for those aged above 45. For example, if a treatment entails an overall cost of INR 7,00,000, one will need to pay INR 70,000 first in case of a 10% co-payment clause. Also, the coverage is available up to the sum insured of the particular policy.