Many individuals, especially salaried employees, prefer to pay a health insurance premium on a monthly basis to make it more affordable and take out coverage for a higher sum insured. This helps the insured ensure their health and that of their family members while maintaining sufficient cash to meet other expenses.
The monthly premium payment method is also useful for the elderly, as they have to pay a high premium. Currently, there are four options for paying the health insurance premium – monthly, quarterly, half-yearly and annually. Policyholders have to go through the fine print when paying the health insurance premium in installments, especially the monthly mode and the quarterly mode.
Health coverage that pays monthly will be more expensive than one that pays annually. The policyholder will have to pay 5-10% more premium in the monthly payment mode than in the annual mode, and also purchase an insurance cover that has at least two years of insurance duration. The policyholder will not be eligible for certain discounts which are there in the annual payment mode.
Moreover, in monthly premium mode, if the policyholder is unable to pay the premium on time, he will benefit from a grace period of 10 days. If he pays within the grace period, he will receive the cumulative bonus. In order to avoid late payment of the premium every month, the insured should ideally set up a direct debit mandate on his bank account.
Settlement of claims
Premium paid on a monthly or quarterly basis will not affect the claims process. While the insurer will have to process the claim even if the policyholder has paid the premium for a month, to settle the claim the policyholder will have to prepay the full balance premium or the insurance company. insurance will deduct the balance premium for the year from the total amount of the claim.
The policyholder may claim tax benefits under Section 80D on the full amount paid as premium at any payment frequency. He should keep the receipt for the down payment when purchasing the policy and subsequent receipts to track the full amount paid.