How my health insurance costs have increased over the years

I have been holding an individual health insurance cover for my family for the last 10 years. In this post, I look at how the insurance premium has increased during this period.

I hold a United India Platinum policy for self, wife and son and a Gold policy for my mother. Each year, I have increased the cover for each member by as much as the insurer would allow.

The cover for me and my wife has doubled from 3L in 2006 to 6L in 2016. For my mom, it has gone up 3.33 times from 1.5L to 5L.

I did not apply my mind much when I got the policy as it was purchased in a hurry when my dad was diagnosed with cancer and none of us has any insurance. During this period, I have made three successful claims: Once for myself, my mom, and my wife. So I am reasonably happy with my rash decision.

Our premium has increased because of three reasons: because of increase in cover, because of movement into the next age band and possibly because of claim-based loading.

The total annual premium was about 0.5 times (50%) the monthly expenses in 2006 and has now grown to 1.2 to 1.3 times more than monthly expenses in 2016.

Health insurance is a personalised product. So consider the trends mentioned in this post as a rough indication of what to expect with your own policy.

The life insurance space has changed quite a lot in the last 10 years. We now have more options from private players. In Feb. 2014, IRDA mandated no-claim-based loading for health insurance policies. We now have the convenience of portability (at least on paper). And we now have group insurance policies offered by banks, which makes it more affordable.

The premium per lakh considered below is the bare premium before service tax, stamp duty, family discount and no-claim discount.

Amma

Health insurance costs-1

The circle represents the renewal premium when a claim was made in the previous policy. The sharp jump could be due to claim based loading and/or movement into a higher age band (post 65).

The claim arose days before the IRDA announced no claim based loading rules. So I wonder if it is due to loading.

Notice that although the sum insured increased steadily with age, the premium per lakh seems to have decreased for a few years! This seems to be the behaviour within each age band as seen below.

Myself

Health insurance costs-2

The oval represents the renewal after a claim. This was when no no-claim loading was firmly in place. The insurer did not increase the premium, but told me that I cannot increase the sum insured that year!

The sharp increases in premium per lakh at ages 36 and 41 should correspond to my moving into different age bands and hence increased risk of hospitalisation.

Wife
Health insurance costs-3
The claim in her case arose a good 4 years before the no-claim loading rule. Yet there was no loading and premium per lakh came down! I think this is because of the unique cause of her hospitalisation.

Notice here again that the premium per lakh sharply jumps above 35 and comes down a bit within that age band (35-40).

My Son

Health insurance costs-5

I can't find the policy when he was new-born and 1Y old. Notice how the premium per lakh has dropped sharply. This is because infants and toddlers are high risk for hospitalisation (even with all the vaccinations that we have now).

Overall Increase

Health insurance costs-4

This is the total premium (set as 1 during the start of the policy) and the year on year increase. A value of 1 in 2006 has become 3.5 in 2016.

The overall increase in premium is about 15%!

I think it would be safe to say that regardless of the policy, if the sum insured is increased each year, the premium should at least increase by 10%.

I have been lucky (so far)  not to have received a letter from United stating that the policy with the same sum insured will now cost ~ 100% more!!

In Jan 2016, Swapnil Kendhe posted about discontinuation of no claim discount and an  increase in Oriental Insurance premium due to

Revision on premium is based on new improved features and claim experience of portfolio including medical inflation. However, we as a responsible Insurer value our relationship with you and have tried our best to keep the premium increase to the minimum.

Since then, a search in FB group Asan Ideas for wealth reveals a premium increase of 90%, 100%, 163% ....

Now that is a blow one cannot prepare for! Will portability help in such cases? Can anybody who went through such an increased and shifted their policy comment on this?

In case you are wondering, "why does he not shift to another policy?". 1) I have a lot of inertia and 2) I cannot even if I wanted to. Both I and my mom have conditions which a new insurer is unlikely to accept! Thank God we got our policy when we were young and healthy!!

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20 thoughts on “How my health insurance costs have increased over the years

  1. jrrakesh

    Hi Pattu, good analysis. One question on your comment - "2) I cannot even if I wanted to. Both I and my mom have conditions which a new insurer is unlikely to accept!"

    Aren't insurers expected to accept all existing coverage from the previous insurer add part of portability?

    I do hope someone among your readers can share their experience on using the portability.

    Regards
    Rakesh

    Reply
    1. freefincal

      "Aren't insurers expected to accept all existing coverage from the previous insurer add part of portability?"
      If they agree to port, then yes. In my case, they would simply say, 'sorry I am not interested to take on this much risk"!

      Reply
  2. Manish Jain

    Good analysis indeed. I have a question: I have a child with congenital issues (now designated as pre-existing illnesses) and over years regardless of what IRDA guidelines suggest many insurers turned down a cover for her. Now I have HDFC that would cover her with three years' exclusion. Meanwhile, we have moved overseas and have a decent cover provided by the employer. We still want an cover in India as eventually we will return. Since, the entry at a later stage will be expensive, is it OK to keep the insured amount low for a couple of years, when they exclude the pre-existing conditions an increase it later when we are more likely to need it?

    Reply
  3. Swapnesh Paliwal

    Good Analysis, I feel IRDA must look into the portability issues. If some one has taken a claim them he/she is bound to the same insurance company as no other company will accept the portability. Also in such cases premiums are increased heavily. In my case it has increased almost 50% within 5 years and now I am finding it very difficult to continue. But because of my claim around two years back, no other company is ready to accept portability. So for me it is only a phenomenon which is only on the paper. And to my surprise same company provides health insurance of same value at much lower premium under some other plan having almost same benefits.

    Reply
  4. raj

    Hello,
    My younger cousin bro is of 22yrs old college going unemployed . If he takes a health insurance policy now than will any TAX dispute arise today or after 3-4years when he gets a JOB.

    Thank You

    Reply
    1. freefincal

      When he gets a salary, he can pay the premium and get 80D deduction. Before that someone else can pay.

      Reply
      1. Sreekanth

        *************************************
        At the outset we thank you for choosing us as your preferred health insurer. In line with our core ethos of consistently enhancing value, convenience and quality deliverables for our customers, we are pleased to present to you an array of significant improvements and modifications to our product ‘Care’. We would also like to intimate you of the changes in existing premium rates (effective from 1st October 2016) due to certain product improvements, modifications and increasing cost of healthcare. The revised Product has been approved by Insurance Regulatory Development Authority of India (IRDAI).
        Selective summary of the product improvements and modifications are as follows:
        • Sum Insured up to INR 6 Crore as compared to INR 60 Lakh offered previously
        • Plans with Sum Insured Options of INR 50 Lakh, 60 Lakh & 75 Lakh, come with an in-built Maternity cover of up to INR 1 Lakh; Similarly, Plans with Sum
        Insured options of INR 1 Crore to 6 Crore, come with an In-built ‘Maternity cover’ of up to INR 2 Lakh
        • “Care Anywhere” Benefit which allows convenience of global coverage can now be availed for 12 critical illnesses instead of 5
        • ‘No Claims Bonus Super’ (Optional Cover) is now available for Higher Sum Insured options of INR 50 Lakh, 60 Lakh & 75 Lakh
        • ‘Annual Health Check-up’ is available at no extra cost to all Insured members, including children in the Policy
        • Through the Benefit ‘Alternative Treatments’, coverage is extended for Non-Allopathic treatments like Ayurveda, Unani, Sidha & Homeopathy (for Sum
        Insured 3 Lakh and above)
        • List of named Day Care Procedures increased to 541
        • In addition to these features, some new Optional Covers are being introduced (under selective plans) – e.g.:
        1. Unlimited Automatic Recharge of Sum Insured
        2. Personal Accident Cover
        • Option of sharing premium paid for your policy with any other Adult (Co-proposer) to avail tax benefits under Section 80D of Income Tax Act.
        • Care continues to offer key benefits like:
        1. Up to 150% increase in Sum Insured through ‘No Claim Bonus’ and ‘No Claim Bonus Super’ (Optional Cover)
        2. Discounts of 7.5% & 10% on Premium rates for 2-year & 3-year policies, respectively
        ********************************************

        Reply
  5. Jithu

    Pattu sir, generally seakimg, shouldn't a floater for spouse and kid , and seperate one for mother would have been better?

    Reply
    1. freefincal

      Better in terms of absolute cost? Perhaps. But the rate of increase would be the similar.

      Reply
  6. Vipul Shah

    Hi Pattu Sir,

    While selecting Health Insurance , many people look only at the premium but doesn't the features , which ultimately turns up to be a mess when there is a claim
    Features to be checked while selecting health policy
    Sub Limits : In Simple Sublimits stands for rent capping. Hospital room rent for a day which is calculated on x% of your sum insured. For example if your sum insured is 5 Lakhs & sublimits is 2% then Rs 10000 would be provided for a room rent . This also differs between networked hospital & non-networked hospital
    When a patient is kept in a general ward vis a vis ICU , every single charge differs , please check sublimits when opting for health insurance
    Next is Co-Payment
    Co-Payment is like you have to bear 20% and 80% would be borne by insurance company, this is a clause which is usually there for parents or senior citizens
    No Claim Bonus, Existing illness criteria etc

    Regards

    Vipul Shah

    Reply
  7. satish

    Swapnesh, I think you must continue with indian policy as you can mitigate the risk for pre-existing condition and hopefully when you come back, you are eligible for the pre-exisiting cover..I dont think insurance Industry cares where you stay during the term of the cover as long as they get premium.

    Reply
  8. Anand Vaidya

    How much insurance premium we pay is one thing, how much do the insurers payback when a claim is made? I have heard/read that many claims were rejected (some unfairly too) and in many cases anywhere between 20%-50% of the actual costs being paid.

    Does it make sense to create our own fund for medical expenses? Say, I can create a fund with 50% Debt , 50% Equity fund and keep adding "premiums" into that every year. The growth of the fund + new contributions can be withdrawn when needed with no hassles, caveats etc. How about a fund of 10L size that keeps growing?

    I have made some calculations on such a scheme including some withdrawals and it seems it makes better sense than buying health insurance. (in my case, it is just me and wife)

    Reply
  9. Nikhil

    Pattu sir, if its ok with you, could you please tell us what the unique cause of hospitalization was so that the premium came down even after a claim?

    Don't mean to intrude but just curious about the premium going down.

    Reply
    1. freefincal

      I should have worded it better. The hosp did not cause the premium to come down. What I meant was that the insurer did not perceive the hosp as a repeatable risk. I would not go into details of what it was.

      Reply
  10. anonymous

    You may wish to find from IRDA under the RTI act, information on portability and I guess, even lodge a protest about a co that refuses. I believe that with such inputs, IRDAI will eventually take a stand.

    Reply

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