Yes, in most cases, health insurance premiums tend to rise annually.

According to the Insurance Regulatory and Development Authority of India's (IRDAI) Annual Report for 2022–23, the total health insurance premium collected by general and health insurers rose from ₹73,051.52 crore in 2021–22 to ₹89,491.76 crore in 2022–23, reflecting a growth of 22.5% over the previous year.

But what exactly are premiums on health insurance, and why do they increase?

What is a Health Insurance Premium?

Your health insurance premium is the amount you pay to keep your policy active. You can think of it as a subscription fee that ensures you stay financially protected during medical emergencies or planned treatments. While premiums are charged quarterly or monthly, some insurers may allow for annual premiums.

Reasons for the Increase in Health Insurance Premiums

An increase in health premiums can be frustrating. But there’s more to it than what meets the eye. Here are the major reasons why your premium may increase over time:

1. Rising Medical Costs

   The cost of hospitalisation, doctor consultations, diagnostic tests, and surgeries has steadily gone up. Hospitals are spending money to upgrade their infrastructure and adopt better technology for the welfare of their patients. This comes with the disadvantage of an increase in expenses that are ultimately covered in insurance premiums.

2. Ageing and Changing Health Profile

   As you grow older, your risk of falling ill naturally increases. Health issues may start cropping up, or existing ones may require more frequent treatment. Keeping all these risks in mind, your health insurance company may increase your premiums.

3. Claim History and Insurer Risk

   If you’ve made claims in previous years, especially multiple or high-value ones, your insurer may increase your premium. While not all policies penalise claims, insurers assess your risk profile during renewal. If you have a history of frequent claims, it can lead to higher premiums.

4. Changes in Policy Coverage and Features

   Upgrading your policy or adding new benefits, like maternity cover, wellness programmes, or OPD coverage, can lead to a higher premium. While these extras add value, they also increase the insurer’s liability, which is reflected in the cost.

How to Keep Premiums on Your Insurance Policy Affordable

Premium hikes can be unpredictable and inevitable, to say the least. But here are a few things you can do to keep the premium on your insurance policy affordable so that you do not lose access to your safety net for medical emergencies:

1. Don’t Miss Your Renewal Deadline

   When you renew your policy on time, you avoid the risk of losing accumulated benefits like the no-claim bonus. Some insurers may also waive loading fees if you’ve maintained a consistent renewal record, so it pays to renew your policy on time.

2. Consider a Family Floater Plan

   This smart financial hack is one way to keep the premium on your insurance policy affordable. Instead of buying individual health plans for each family member, a family floater plan offers shared coverage under a single premium. This proves to be more cost-effective, especially for young families, and simplifies management with one renewal date, so you don’t miss renewing on time. Talk about killing two birds with one stone

3. Be Selective With Add-Ons

   Not every add-on is meant to be your perfect match. For example, if you know you aren’t going to start a family anytime soon, then adding a maternity cover to your health plan makes no sense for the time being. It only adds to your expenses. So, eliminate unnecessary add-ons and focus on the ones you truly need.

4. Make Claims Judiciously

   Some insurers may penalise policyholders for making claims. Hence, try to avoid raising claims for minor treatments. Preserving your no-claim bonus can lead to increased coverage or discounts in the following year, helping keep premiums lower in the long run.

5. Buy Early and Lock in Lower Rates

   Getting insured when you're young and healthy means you’re considered a low-risk policyholder. This often translates to lower premiums and continued benefits as you age, as long as you remain insured with the same provider.

Bottom Line

Yes, the increasing premiums on health insurance are frustrating, but the reasons behind them are often practical. That said, you’re not helpless. With a bit of planning, you can keep your premium costs in check.

FAQs:

1. Can I reduce my health insurance premium?

   Yes, you can reduce premiums on your health plan by selecting only essential add-ons, going for higher deductibles, living a healthier lifestyle, buying policies online for discounts, and choosing plans that suit your needs rather than what looks attractive on paper.

2. Will my premium increase if I file a claim?

   In many cases, a single claim won’t immediately increase your premium. However, some policies include claim-based loading, where the premium may rise after a claim. Moreover, frequent claims over time could lead to a higher premium during renewal.

3. What is the impact of no-claim bonuses on my premium?

   For every year you don’t make a claim, you may receive benefits like higher coverage at no extra cost or a discounted premium. It’s a way for insurers to reward responsible policyholders. However, this is subject to insurers. Make sure to read the fine print before purchasing a policy.

4. Can I negotiate my health insurance premium?

   Negotiating directly isn’t always straightforward, but there’s no harm in trying, especially if you’ve had a policy for years and haven’t made many claims. Some insurers might consider offering better terms to retain loyal customers.

5. Have recent medical technologies affected insurance premiums?

   Yes, advancements like robotic surgeries, high-end diagnostics, and precision medicine have improved care, but they come with hefty price tags. Since insurers now cover many of these modern treatments, premiums have increased to account for the rising healthcare costs.