What is the policy period in health insurance?

Have you ever thought about how long your health insurance really keeps you covered, and how that duration impacts your premium and savings? The policy period in health insurance decides how long your plan stays active, how much you pay, and how often you renew. Here's how picking the right term can help you save more.

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Before moving forward, Let’s take a quick look at some of the leading health plans and their policy periods:

P.S.: *Can be reduced with add-ons; **Can be increased with an add-on

In this guide, we’ll explain what the policy period means, how it affects your premium, the typical options available, and the factors to consider before choosing one. Whether it’s for you or your family, knowing this can help you pick the right plan and save money in the long run.

How to Check the Policy Period of Your Health Plan?

Your policy period begins on the date your premium is received and the insurer approves the proposal, not the date you submitted the form.

To find your policy period:

1. Check the “Policy Start Date” and “Policy End Date” on your policy document or e-policy.
2. You can also view these details anytime through your insurer’s website, mobile app, or email.

Knowing these dates helps you track your coverage and renew on time so you stay protected without any break.

How Does the Policy Period in Health Insurance Affect the Premium?

The policy period in health insurance plays a crucial role in determining the amount you pay in premiums.

1) Short-term duration (1-year policy): With yearly renewals, your premium remains the same for that year, but may increase later due to age (annually by a small amount or insurers revise them when you move into a new age bracket, usually every 5 or 10 years) &/or medical inflation. Such policies are commonly offered by all insurers.

2) Medium duration (2–3 year policy): Choosing a more extended duration often comes with discounts of 5–15% when you pay upfront. It also locks in your premium, protecting you from yearly hikes and saving you money in the long run. Additionally, it eliminates the hassle of renewing your health insurance annually.

For instance, 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.

Meanwhile, in the Care Supreme plan, the discount is applied progressively each year. This means you get 7.5% off the premium in the second year for a 2-year policy. For a 3-year policy, you receive 7.5% off in the second year and an additional 10% off in the third year, resulting in growing savings over time.

3) Long term duration (4-5 year policy): Long-term health plans offer stability and savings. By paying a larger upfront premium, you enjoy discounts and lock in your rate for the entire policy duration. This protects you from annual premium hikes due to medical inflation, making long-term plans both cost-effective and hassle-free. 

Plans such as ICICI Elevate, Star Superstar and Care Ultimate  offer policy tenure up to 5 years.

Let’s take a look at the premiums for a 25-year-old, non-smoker male living in Delhi, insured for a sum of 15 lakhs:

What Are the Minimum and Maximum Durations for Health Insurance Policies?

When it comes to health insurance, the policy period determines how long your coverage remains active before it is renewed. Most insurers in India offer flexible durations to suit different needs.

1. Minimum duration: Usually 1 year, which is the standard for most comprehensive health insurance plans. Some short-term covers (like travel or event-based policies) may last only a few days or months, but these are less common for long-term health needs.
2. Maximum Duration: Retail health insurance can be renewed for a lifetime. However, each policy term is offered for a fixed duration, usually 1, 2, 3, or up to 5 years, after which it must be renewed to maintain the coverage. Upon renewal, you again get the choice of selecting the period/tenure you want.

What Things to Consider When Choosing a Policy Period?

Choosing the correct policy period for your health plan depends on your lifestyle, financial situation, and personal plans. Let's take a look at some key points to keep in mind:

1. Budget: Multi-year plans often come with discounts, but they require a larger upfront payment. Choose what fits your pocket.
2. Flexibility: If you anticipate changes, such as a new job, relocation, or marriage, a 1-year policy may provide you with more flexibility to adjust.
3. Renewal & bonuses: Longer terms reduce the hassle of yearly renewals and help you accumulate no-claim bonuses.
4. Wellness rewards: Some insurers offer discounts or health-based rewards if you stay with a policy for multiple years.
5. Medical inflation: A multi-year plan can lock your premium and protect you from yearly price hikes.
6. Convenience: Longer policies mean less paperwork and fewer reminders to renew.

By balancing these factors, you can select a policy period that provides both savings and peace of mind.

How to Select the Ideal Policy Period for Your Health Insurance (Ditto’s Take)

A multi-year health insurance plan can be a smart move if your healthcare needs are steady and you’re happy with your insurer’s service and claims process. It lets you lock in your premium, stay protected from medical inflation, and skip the hassle of yearly renewals, saving both money and effort.

That said, flexibility is limited. Making changes to your plan, such as adding family members, updating riders, or switching plans (porting or migrating) mid-term, can be difficult. If you expect significant life changes soon, a 1-year plan may be more suitable, as it provides the flexibility to review and adjust your coverage as your needs evolve.

Why Talk to Ditto for Your Health Coverage?

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Final Thoughts

Choosing the correct policy term for your health insurance plan is essential as it helps strike a balance between savings, flexibility, and long-term protection against medical inflation. Here are some key takeaways:

1. Longer policy terms (2–5 years) offer premium discounts of 5–15% and protection from annual rate increases.
2. Shorter tenured plans (1 year) provide flexibility for plan changes or upgrades.
3. Multi-year plans reduce the hassle of renewals and ensure uninterrupted coverage.
4. Upfront payment may be higher, but total savings are much greater in the long run.

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