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The cost of hospitalisation has increased rapidly after the Coronavirus pandemic. With increase in number of claims, health insurance premiums are also increasing. To beat this type of inflation, multi-year health insurance policy is a good option. Generally, this policy is for three years. The policyholder has to make a lump sum payment. In this regard, insurance companies provide discounts of up to 10-15 percent on premiums. This can result in significant savings over a long period of time. If you take this policy, you will be free from the hassle of renewing every year. If you renew your health insurance policy on time, your family’s health cover will not be disrupted.

Lighter burden on pocket
Multi-year policies are easy to manage considering their cost. You can avoid the yearly premium increase. In health insurance plans with annual premiums, companies increase the policy price at the time of renewal. As you age, the health insurance premium also increases. In India, annual medical inflation, i.e., the average increase in medical expenses is about 10-15 percent. This type of inflation affects not only hospital costs but also the cost of insurance companies.

However, with a multi-year policy, you pay a lumpsum amount for the entire tenure. This way, you avoid the burden of  increase in premium. After the COVID-19 pandemic, when insurance companies increased the premium of health insurance policies, it did not impact the multi-year policyholders. In addition to premium savings, experts also suggest that customers who opt for multi-year policies can receive discounts of up to 15 percent on premiums. Premium payment for multi-year policies can also be made in installments. It is not necessary to pay the premium for three years at once. You can choose annual, half-yearly, or quarterly payment options.

How to get tax exemption?
Under section 80D of the Income Tax Act, you can get a tax exemption of up to Rs 25,000 on health insurance premiums every year. In the multi-year policy, if you pay  the three-year premium at once, then, you will be able to get exemption for three years. Premium will be divided by three. Tax exemption will be calculated accordingly. People up to 60 years of age can claim benefits of up to 25,000 rupees every year. If you have taken a policy with a premium of 60,000 rupees, then every year you can claim a tax rebate of  20,000 rupees for three years. If the age of the policyholder is more than 60 years, then you can take advantage of tax exemption of up to 50,000 rupees under 80D.

Disadvantages of multi-year policy
You can not take advantage of porting in a multi-year policy. If you are unhappy with the company after one year of taking the policy, then you will not be able to port it to another company. That is, you have to be tied to the same company for as many years as you have bought the insurance. Similarly, if the premium falls, you will still pay the same premium as it was decided earlier. However, the possibility of a reduction in insurance premium is very low.

What to check in multi-year policy?
Personal finance expert Dr Rahul Sharma says that before buying a multi-year policy, check the company’s track record of claim settlement. How many claims did the company pay compared to the claims that were made? Because there is no porting facility in this policy, it becomes necessary to find out the claim settlement ratio of the company. Also, it is very important to get all the information about which disease will be covered after how many waiting periods in the three-year policy.