Health insurance premiums typically increase with age, and policyholders may find a large sum insured harder to maintain. Yet a lower premium may come at the cost of protection just when medical risks and treatment expenses are rising. Before trimming cover, policyholders need to assess duplication, family composition, health history, employer cover and their capacity to pay a large bill from savings.
When A Lower Cover May Make Sense
“A lower cover may appear attractive because of the immediate premium saving, but the long-term consequence of being underinsured can be significantly greater. Reduction may be considered only in limited circumstances,” says Narendra Bharindwal, President, Insurance Brokers Association of India (IBAI).
“Lowering your health cover is generally a risky move, but it may make sense when your children have grown up and moved to their own health plans, leaving fewer members to cover under the family floater,” says Sarita Joshi, head of life and health insurance, Probus.
Can A Super Top-Up Keep Costs In Check?
Before lowering coverage, consider age, previous claims, hereditary illnesses, family size and treatment costs in the city where care is likely to be taken. Employer insurance should be viewed as supplementary cover because benefits may change following a job switch, retirement or separation from service.
Medical inflation also reduces the purchasing power of a policy. A cover that appears adequate today may fall short several years later. Policy features, including co-payment, room-rent limits, waiting periods, exclusions and restoration benefits, also affect how much protection is available.
“Instead of paying a high premium for a very large base policy, you can keep the base cover at a level that is affordable and use a super top-up for additional protection,” says Joshi.
A meaningful base policy paired with a super top-up can provide additional protection against large hospital bills at a more manageable premium. The deductible should match an amount that the base policy and personal savings can realistically meet.
“The deductible should ordinarily be an amount that can realistically be absorbed through the base policy and/or the policyholder’s own financial resources. Choosing an excessively high deductible merely to reduce premium can create a significant gap in protection,” says Bharindwal.
Policyholders should also check whether they are buying a top-up or a super top-up, since deductibles and aggregate claims work differently. The aim should be to maintain adequate protection sustainably, not simply secure the lowest premium today.
