A long-term replacement for annual health insurance coverage is a multi-year policy. As the name implies, a multi-year insurance will offer protection for a period of two or more years. It often enables policyholders to pay the premium for the following two or three years all at once when purchasing the policy, saving them the trouble of having to renew it annually. Although such policies offer numerous benefits, one must also be aware of their drawbacks.
Instead of anticipating a return on investment, one should get health insurance with the goal of protecting their resources in the case of unanticipated circumstances. Due to the increasing cost of healthcare, health insurance is becoming a need rather than an option. Having health insurance coverage helps you safeguard your intended budget in the event that an accident occurs.
People are hesitant to get a health insurance plan because they are unaware that it requires a premium payment and offers no benefits. It is important to get a health plan for everyone since a health insurance plan will protect you when you are at your most vulnerable.
Benefits of Multi Year Health Insurance Policy
A multi-year health insurance policy’s premium is fixed for the duration of the policy. This is especially useful given how frequently insurers raise their premium rates. As a result, a policyholder is shielded from any future rate adjustments that an insurer makes to the insurance premium throughout the course of the following several years.
Many health insurance companies have recently raised the cost of their policies. For at least the next several years, those who obtain a multi-year coverage won’t be responsible for paying the new prices. You can lock in the premium amount by selecting a multi-year insurance and paying the premium for a maximum of three years.
How can we benefit from a Multi-Year Policy?
The benefits of investing in a policy that lasts for more than a year increase now that you are aware that you can receive tax benefits from health insurance policies. As a result, your multi-year health insurance plan’s premium cost is guaranteed to remain constant over the years—a crucial safeguard in the event of a price increase!
For your multi-year coverage, you just need to pay an upfront, one-time significant quantity of premium. So, before selecting such a long-term strategy, it’s crucial that you think about it.
You need not worry, though, if your policy is only valid for the first year of your health insurance plan when it comes to tax deductions. You have the option of claiming it annually. For instance, if you bought Rs. 50,000 for five-year coverage, the maximum tax deduction you are eligible for is Rs. 10,000 each year.
Under Section 80D: Tax Exemption on Health Insurance
Tax deductions applied under section 80 D of Income tax act is as follows:
|Total deductions under section 80D
|Insured members age below 60 years
|For self, spouse and children-Rs 25000
|For Parents- Rs 25,000
|Insured family members (including self, spouse and children) under 60 years and parents above 60 years.
|For self, spouse and children-Rs 25000
|For Parents- Rs 50,000
|All insured members including parents above 60 years
|For self, spouse and children-Rs 50,000
|For Parents- Rs 50,000
7 Reasons to choose Multi-Year Health Insurance Plans
Here’s a look at the various advantages of purchasing a Multi-Year Insurance Policy:
1. A Simple Renewal
Annual policy renewals are required for the majority of health insurance policies. However, one should not be concerned about yearly renewals if they get multi-year health insurance. These plans frequently have a two- or three-year renewal term. Detailed health insurance with a two- to three-year policy term and a lifetime renewal benefit. With this choice, you may always renew your insurance coverage.
Some of these plans offer coverage for both contemporary and conventional medical procedures. When necessary, a second electronic opinion on severe diseases might be selected along with coverage for mental illness. As a result, a person can benefit from a single plan over a longer length of time.
2. The Benefit of Lock-In
As you become older, the premium you pay increases annually, as you may be aware. For instance, a 40-year-old can have a premium that is 30–40% greater than someone in their 30s. You can fix the premium cost for the following two to three years by deciding to pay your premiums over a longer period of time. If the insurance changes their rates, this will assist you avoid the anticipated increase in premiums.
3. Coverage for the Waiting Period
The benefit of eliminating the waiting time at each renewal is offered by health insurance policies with duration of two to three years.
4. Few Documents
Health planning for the long term significantly lessens the quantity of documentation needed.
5. Tax Benefit
Health insurance premiums paid for oneself, a spouse, and children are eligible for tax advantages of up to Rs 25,000 under Section 80D of the Income Tax Act. To receive the tax advantage for your health plan, however, you can proportionally split the one-time premium you paid under a multi-year health insurance plan that you made. For instance, you would be eligible for an annual tax deduction of Rs 12,000 if you paid a premium of Rs 36,000 for a three-year plan that covered you, your spouse, and a kid.
Given that a Health Insurance Plan is a long-term product, choosing a multi-year health insurance plan may be advantageous if you don’t want to deal with the trouble of having to renew your policy every year and you have the money to pay the higher upfront price. A health insurance plan is your lifelong companion, whether it has a multi-year term or not. Make sure to give it your full attention and don’t disregard it.
6. A wide range of Health Services
It’s important to get insurance that offers full coverage against all medical expenses since health crises can happen at any time, and because healthcare prices are rising. Furthermore, not having to worry about prices motivates one to get the finest care imaginable.
7. Set Premiums
One can protect themselves against premium increases by purchasing a multi-year health insurance plan. Health plan premium values are affected by rising healthcare costs, which causes an annual increase. A set premium, however, that provides coverage under a comprehensive plan for a number of years is included with multi-year health insurance policies.
By selecting the best health insurance option, you may avoid paying large medical bills or losing your life savings to accidents or serious illnesses.
In addition to providing you with security when you need it most, health insurance also safeguards your funds. Therefore, it would not be advisable to disregard this tax deduction. Make sure to ask your health insurance provider about the amount of tax reduction you are eligible for before buying a health insurance plan.