Should You Opt for Multi-Year Health Insurance Plans?

What is a Multi-Year Health Insurance Plan? A multi-year pay health insurance plan involves paying a single, larger premium upfront to secure health coverage for several years, typically 2 to 5. The most significant advantages include discounted premiums (up to 15%), protection from inflation-driven price hikes, and hassle-free renewals. However, the trade-offs include limited flexibility, difficulty in switching plans mid-term, and restricted modifications until renewal.

Imagine paying your health insurance premium once and forgetting about it for the next 2-5 years, all while saving money and avoiding surprise hikes. Sounds great, right? This is exactly what a multi-year health insurance plan offers. 

But while these perks sound appealing, these long-term policies come with trade-offs that may not suit everyone.

In this article, we’ll explore

• What a multi-year health insurance plan is and how it works
• The pros and cons of multi-health insurance plans
• Tax benefits, refund rules, and age-based pricing quirks
• Real-life plan comparisons, including discounts and pricing examples
• And finally, when it makes sense to choose a multi-year health insurance policy and when it doesn’t

If you’re considering locking in your health insurance for multiple years, read on to find out whether it’s a smart financial move or a commitment worth rethinking.

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What is a Multi-Year Health Insurance Plan?

A multi-year health insurance plan (also called multipay or multi-tenure) covers you for more than one year: typically 2, 3, 4, or 5 years. These are often labeled as 2-pay, 3-pay, 4-pay, or 5-pay plans.

Unlike regular annual policies that require yearly renewal (and usually cost more over time), multi-year plans come with two major perks:

1. A discounted but hefty upfront premium
2. A locked-in premium rate that shields you from inflation-driven hikes at least for the policy duration

You pay once, and your coverage continues uninterrupted for the chosen tenure.

Pros and Cons of Choosing a Multi-Year Health Insurance Plan

Multi-year (or "multipay") health insurance plans offer several advantages, but also have limitations.

Pros	Cons
Avoid Inflation-Based Hikes	Stuck for the Long Run
Convenience and Less Hassle of Renewals	Miss Out on New Plans/Offers
Consistent Coverage	Portability & Migration Restrictions
Discounted Premiums (Lower annual avg cost)	Modification Challenges

Still unsure if a multi-year policy is right for you? Talk to a Ditto advisor for a personalised recommendation: no spam, no pressure. Book a free call now!

Let’s break down the pros and cons of multi-year health insurance policies further

What Are the Pros of Choosing a Multi-Year Health Insurance Plan?

1) Protection from Inflation Hikes

One of the most significant benefits is cost predictability. Health insurance premiums often increase annually due to medical inflation. With a multi-year plan, your premium is locked in, helping you avoid these annual hikes.

2) Convenience and Less Hassle

Forget about yearly renewals, reminders, and paperwork. A multi-year policy saves time and effort by keeping your coverage active over a longer duration without interruptions.

Did you know? The HDFC ERGO Optima Super Secure Plan comes with a unique twist. It can only be purchased and renewed in 3-year intervals. There’s no 1-year or 2-year option, making it a “3-pay only” plan right from the start! To counterbalance the initial need for higher financial liquidity from the buyer, the insurer offers a discount of 10% on the overall premium.

3) Consistent Coverage

Multi-year plans ensure that you have continuous protection without the risk of policy lapses. This is particularly helpful if:

• You have a pre-existing condition
• You’re in a transition phase (job change, travel, etc.)

4) Discounted Premiums

Most insurers offer upfront discounts (typically 5-15%) for choosing a multi-year tenure. This can result in significant savings over time, especially for higher coverage amounts.

These discounts can be structured in two ways: either on the total premiums or on the following year’s premiums.

For example, in the case of HDFC ERGO’s Optima Secure, the insurer gives a flat discount on the overall premium if you pay for multiple years in advance, i.e, 7.5% for a 2-year term and 10% for a 3-year term.

On the other hand, in the Care Supreme plan, the insurer applies the discount year by year on future premiums. Mathematically, this translates to 7.5% off the second year's premium in a 2-year term and 7.5% off the second year, plus an additional 10% off the third year's premium in a 3-year term.

Did You Know? If you’ve already paid upfront for a 2-year or 3-year policy, you won’t be eligible for the GST exemption currently, and the insurer will not refund you the GST already paid. The benefit applies only to transactions (issuance or renewal) made on or after 22 September 2025. So, if you're planning to buy a new multi-year policy, now's a great time, as you’ll enjoy even lower premiums thanks to the GST savings. To know more about the GST Exemption, read this guide.

What Are the Cons of Choosing a Multi-Year Health Insurance Plan?

1) Limited Flexibility

Once you’re locked into a multi-year plan, switching policies becomes harder. If your health needs evolve or a better policy becomes available, you may not be able to change until the tenure ends.

2) Missed Opportunities

New health insurance products and promotional offers launch frequently. With a long-term plan, you might miss out on newer, better-suited options introduced during your policy period.

3) Portability Restrictions

Porting your policy (to another insurer) or even migrating to another plan within the same company is often not allowed mid-term. This could be restrictive if you’re unhappy with service quality or coverage.

4) Challenges with Modifications

Do you need to increase your sum insured or add a rider? Mid-term changes in multi-year policies can be complex or not allowed, depending on the insurer’s rules.

How Do Tax Benefits Work With Multi-Year Health Insurance Plans?

The good news is that tax benefits under Section 80D (only under the old regime) of the Income Tax Act apply to multi-year health insurance policies just like regular annual plans.

When you pay premiums upfront for a multi-year policy, you can claim a deduction for the total premium paid in that financial year, irrespective of how many years the policy covers. This means if you opt for a 3-year policy and pay the entire premium at once, you can claim the full amount as a deduction in the year of payment, subject to the overall Section 80D limits.

Pro Tip: You can divide the total premiums paid by the number of years for which it is paid and claim the tax deductions accordingly for all the years. 

Should You Opt for Multi-Year Health Insurance Plans? Ditto’s Take

If you can manage the one-time large upfront payment, this route offers the maximum savings.

Regulatory Update (2024): As per IRDAI’s latest directive (effective October 2024), insurers can no longer book the full premium amount of a multi-year policy in the first year. Instead, they must spread the premium over the policy's tenure. For example, booking one-third each year in a 3-year plan. Why it matters: 1) This improves transparency and ensures commission payouts and revenue reporting are more evenly aligned. For you, the buyer, it doesn’t change your premium, but it may affect how insurers design or market these plans going forward. 2) The change to a ""trail-based"" commission model, where payouts are spread out makes selling multi-year policies less financially attractive in the short term. 3) The new structure incentivizes agents to focus on policyholder retention and long-term service. By linking commissions to the policy's duration, the directive encourages better customer engagement to ensure renewals, the new system is expected to curb instances of agents mis-selling long-term plans to earn quick payouts.

Our take? A multi-year policy is a smart financial move if:

• Your healthcare needs are relatively stable
• You don’t foresee significant changes in your family or health profile
• You’re comfortable with the insurer’s service and claims process

It’s a great way to escape the cycle of annual premium hikes, especially since many insurers raise premiums every few years due to medical inflation or age bracket jumps. You also get to skip the hassle of annual renewals, which means less paperwork and fewer reminders.

But remember, multi-year plans come with limited flexibility. If there’s any chance you might want to switch plans, add members or riders, or increase coverage soon, it’s worth weighing the risks.

Want help picking the right multi-year plan? Our advisors at Ditto can help you find the right fit. Book a free call now!

Popular Plans That Offer Multipay Options

Before we discuss the list, here’s how we decide what plans to feature. At Ditto, every health plan goes through our six-point evaluation framework. It doesn’t mean these are the only good plans, but that they stand out after being scored across all six pillars. You can learn more about how we evaluate health insurance plans here

Several leading insurers offer multi-year or "multipay" health insurance options, each with its own tenure limits and discount structures. Here’s a breakdown of some popular plans and what you can expect in terms of tenure, discounts, and special features.

1) Niva Bupa Aspire

• Multipay Tenure: Up to 3 years
• Estimated Discount: 

For a 2-year term, a 7.5% discount is applied to the second year’s premium.

For a 3-year term, a 15% discount on the 3rd year, along with 7.5% on the 2nd year’s premium.

• Notable Feature: The Fast Forward add-on allows you to pool your sum insured across all three years, giving you flexibility to use a higher amount in a single year if needed.

2) Care Supreme

• Multipay Tenure: Up to 3 years
• Estimated Discount: 7.5% on the second year premium if you pay for the 2-year policy term in advance, and an additional 10% on the third year premium if you pay for the 3-year policy term in advance.

3) Longer Tenure Options

If you're looking for more extended multipay options, you can consider:

• ICICI Lombard’s Health Elevate
• Star Health’s Super Star
• Care Ultimate 

Notable Feature: Care Ultimate also allows cumulative usage of the sum insured over the policy period, which is a valuable option for managing high, irregular medical costs.

Both plans offer a multipay tenure of up to 4-5 years and have an estimated discount of 12-15%

Premiums for a 25-year-old, living in Delhi, insured for a sum of 15 lakhs.

Plan	1 Pay	2 Pay	3 Pay	4 Pay	5 Pay
HDFC Optima Secure	₹14,060	₹26,143 (save ₹2,120)	₹38,390 (save ₹4,266)	NA	NA
Care Supreme	₹12,249	₹23,581 (save ₹1,045)	₹34,606 (save ₹2,438)	NA	NA
Aditya Birla Activ One Max	₹10,138	₹19,786 (save ₹1,594)	₹29,379 (save ₹3,244)	NA	NA
ICICI Elevate	₹10,870	₹20,918 (save ₹797)	₹30,406 (save 2,140)	₹39,889 (save ₹3,484)	₹49,376 (save ₹4,828)
Star Super Star	₹10,527	₹20,049 (save ₹949)	₹29,244 (save ₹2,136)	₹38,303 (save ₹3,465)	₹47,151 (save ₹4,984)

Note: The savings mentioned above are based on current-year premiums; however, since health insurance premiums tend to increase each year, locking in a multi-year plan, especially a 5-year option, can potentially lead to even greater savings over time than what is shown here.

If the premiums in the table seem higher for longer terms, it's because you're paying for multiple years upfront, but with built-in discounts. 

Insurers reward this commitment by reducing the total cost. These savings vary by plan and tenure, but the logic is the same: you avoid annual price hikes, and the insurer gains predictability. Over time, this can lead to significant savings.

And if you’re worried about opportunity cost, think again. Fixed deposits yield about 6-7% risk-free, and equities about 10-12% in the long run, while medical inflation runs at 12-14%. With rising insurance adoption and ongoing operational and regulatory changes, health insurance price hikes are here to stay, making multi-year payments a smart hedge against uncertainty.

Why Choose Ditto for Health Insurance

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Conclusion

Multi-year health insurance plans are a smart way to beat medical inflation, save money, and simplify your life. But they come with trade-offs, mainly around flexibility and portability.

So, here’s the final verdict:

• Go for it if you can afford it and your needs are stable.
• Do your homework: check the plan’s discount, flexibility, and claims process.
• Use trusted platforms like Ditto to compare and choose the right multi-year plan for you.

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