Imagine this: You’ve finally found the perfect health insurance policy. It covers all your needs AND offers excellent benefits.

You close this deal owing to the fact that it’s one of the best policies that fits right within your budget. But a year later, after you’ve served a significant part of the waiting periods, the annual renewal comes around, and with it, a hike in your premium. This scenario is all too common, leaving many wondering if there’s a better way.

This is precisely where multi-year policies come into play.

What is a Multi-Year Health Insurance Policy?

Plans that offer the perk of paying the premiums for more than a year at a time are called multi-year health insurance policies. Thus, any Health Insurance Policy can be a multi-year policy, provided you can make upright premium payments for more than a year (can be 2 or 3 years).

These policies allow you to pay the premium upfront as a lump sum or through an EMI option. By opting for a multi-year policy, you lock in the premium rate, protecting yourself from annual premium hikes due to inflation or other factors.

One of the most significant advantages of this type of policy is that it ensures continuous coverage, eliminating the need for yearly renewals, cost increases, and administrative tasks.

Let’s take a look at their advantages and disadvantages in detail now:

Heads Up: It takes an average person up to 5 hours to read & analyze a policy, and 10 hours or more to compare different plans and make a decision.
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Advantages of Multi-Year Health Insurance Policies

  1. Locked Premiums: When you lock in your premiums for 2-3 years, you protect yourself from inflation and annual premium hikes. This stability can lead to significant savings over time.
  2. Discounts on Premiums: Insurers often offer discounts on multi-year policies, making them more cost-effective than annual policies. These discounts can be substantial and provide further financial benefits.
  3. Convenience: With a multi-year policy, you skip the hassle of premium payments, at least for the duration of the policy. This convenience can be a significant advantage to most people.
  4. Tax Benefits: You can avail of tax benefits under Section 80D of the Income Tax Act. For multi-year policies, the tax benefit is divided over the policy term, providing deductions for the duration of the policy.

Disadvantages of Multi-Year Health Insurance Policies

Multi-year health insurance plans surely paint a pretty picture. They offer a wide range of perks that entice policyholders. However, this perk isn’t without its set of caveats -

  1. Difficulty in Porting: If unsatisfied with the insurer, porting your policy to another provider becomes tedious with a multi-year plan. You are locked into the policy for the entire duration, limiting flexibility.
  2. Upfront Payment: Paying the premium for 2 or 3 years upfront may not be feasible for everyone. Even though the amount is lower than paying for 3 years separately, you need to make the payment in one go. However, many insurers now partnered with NBFCs and offer an EMI option to ease this financial burden.

How Do You Choose a Good Multi-Year Health Insurance Policy?

When selecting a multi-year health insurance policy, consider the following features to ensure comprehensive coverage and value for money:

  1. No Room Rent Restrictions: Policies without room rent limits provide greater flexibility during hospitalisation, allowing you to choose a room based on availability and comfort.
  2. No Copayment: A policy with no copayment ensures you do not have to pay a portion of the medical expenses out of pocket. A good policy should have no copayment.
  3. No Disease-Wise Sub-Limits: Avoid policies with disease-wise sub-limits to ensure comprehensive coverage for various treatments.
  4. High No-Claim Bonus: Look for policies that offer a high no-claim bonus. This increases your sum insured for each claim-free year, providing additional coverage without extra cost.
  5. Extensive Pre-and Post-Hospitalisation Expense Coverage: Policies that cover pre- and post-hospitalisation expenses can significantly reduce out-of-pocket costs involved in pre-ops and follow-ups before and after the procedure.
  6. Lucrative Restoration Benefits: Policies with restoration benefits replenish the sum insured after it gets exhausted. This immensely helps if you make multiple claims in a year.
  7. Daycare and Domiciliary Treatment Coverage: Ensure the policy covers daycare and domiciliary treatments to cover treatments for cataracts, appendicitis, etc.
  8. Low Waiting Period: Opt for policies with shorter waiting periods for pre-existing conditions and specific treatments to ensure timely coverage (say 2 years).
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Best Multi-Year Health Insurance Policies in 2024

Considering these criteria, here are some of the best multi-year health insurance policies that you can buy in 2024:

  1. HDFC ERGO Optima Secure: HDFC ERGO Optima Secure offers comprehensive coverage with no room rent restrictions, no disease-wise sub-limits, and no copayment. The policy provides an extensive pre- and post-hospitalisation of 60 and 180 days, respectively and a lucrative no-claim bonus of 50% per annum, up to 100%. Additionally, it covers daycare and domiciliary treatments, making it one of the top choices for multi-year health insurance.
  2. Aditya Birla Activ One: Aditya Birla Activ One is known for its wellness benefits and preventive care features. This policy covers pre-hospitalisation for 90 days and post-hospitalisation expenses for 180 days. It also includes annual health check-ups, AYUSH treatment coverage, and an unlimited restoration benefit of 100% for any illness, making it an excellent option for those seeking extensive coverage.
  3. Bajaj Allianz Health Guard Gold: Bajaj Allianz Health Guard Gold provides comprehensive coverage at an economical price. It has a high sum insured of up to ₹ 50 lakh and includes a no-claim bonus of 10% up to 100% of the sum insured. It also has a 100% restoration once a year. This policy provides maternity coverage after a waiting period, making it a versatile choice for multi-year coverage.
  4. Niva Bupa ReAssure 2.0: Niva Bupa ReAssure 2.0 stands out for its extensive coverage and unique features. The policy has no room rent restrictions, disease-wise sub-limits, or copayment. It offers a restoration benefit of 100% an unlimited number of times. It also provides a unique no-claim bonus structure where the unused amount of that year is carried forward to the following year.
  5. Care Advantage: Care Advantage offers extensive coverage with a high sum insured, no room rent restrictions, and no disease-wise sub-limits. It offers a high no-claim bonus and restoration benefits, making it a top choice for multi-year health insurance. In addition to that, this policy includes coverage for alternative treatments under AYUSH and annual health check-ups.

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Conclusion

Choosing a multi-year health insurance policy can provide multiple benefits, including inflation-proof premiums, discounts on the amount paid, and continuous coverage for more than a year. However, there are also significant downsides, such as being unable to port your policy easily and having to make an upfront payment for 2 or 3 years. At the end of the day, you need to weigh the pros and cons and make an informed decision by picking the policy that best fits your budget and your medical needs.