A subscription-like equated monthly instalment (EMI) model is gaining traction in India’s health insurance market, with 13% of customers opting to pay their premiums through monthly or quarterly instalments, according to a report by Policybazaar.
What is the model?
The model allows customers to secure multi-year health insurance coverage while spreading premium payments over a longer period, making health protection more manageable for household budgets. The move comes amid efforts to make health insurance more affordable and accessible, including the recent reduction in GST on individual health insurance premiums.
Under the model, policyholders can opt for coverage of up to three years while paying premiums in smaller instalments rather than making a lump-sum payment upfront. For instance, a three-year policy with an annual premium of ₹12,000 would cost ₹36,000 over the policy term. Instead of paying the entire amount upfront, a customer could pay ₹1,000 a month over 36 months, subject to the insurer’s payment terms.
Policybazaar said the average annual premium or EMI ticket size under the model stands at ₹17,500, with 13% of customers choosing monthly or quarterly payment options.
Multi-year policies
Multi-year policies can also offer greater predictability in healthcare expenses by allowing customers to lock in premiums for the policy term, subject to policy conditions. This can help them avoid renewal-related premium increases during that period, which can typically be around 10%, depending on the policy terms.
The model also offers the benefit of continuity of coverage by reducing the need for annual renewal decisions and the risk of a lapse arising from a missed renewal. Periodic payments may further help customers manage their cash flows while maintaining health insurance protection over a longer period.
“Health insurance is gradually moving beyond the traditional annual purchase-and-renewal cycle towards a more flexible, long-term protection model. With multi-year policies and monthly or quarterly payment options, customers can spread their premium outgo while securing continuity of cover for a longer period. This signals that consumers are increasingly looking for predictable, manageable ways to fund their health protection,” said Rohan Goel, business head, health insurance, Policybazaar.