Many individuals, especially the salaried ones, prefer to pay health insurance premium on a monthly basis to make it more affordable and take a cover for a higher sum insured. This helps the policyholder to insure the health of himself and his family members while retaining adequate liquidity to meet other expenses.
The monthly premium payment mode is helpful for senior citizens too as they have to pay a hefty premium. At present, there are four options for paying health insurance premium — monthly, quarterly, half-yearly and annually. Policyholders must go through the fine print when paying the health insurance premium in instalments, especially the monthly mode and the quarterly mode.
More expensive
A monthly payment health cover will be more expensive then the yearly payment one. The policyholder will have to pay 5-10% more premium in the monthly payment mode as compared to the yearly mode, and also buy an insurance cover which has at least two years of policy term. The policyholder will not be eligible for certain discounts which are there in the yearly payment mode.
Moreover, in the monthly premium mode, if the policyholder is not able to pay the premium on time, he will get a grace period of 10 days If he pays within the grace period, then he will get the cumulative bonus. In order to avoid delays in paying the premium every month, the insured should ideally set up an auto debit mandate in his bank account.
Claim settlement
The premium paid on a monthly or quarterly mode is not going to affect the claim 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 pay the entire balance premium upfront or the insurance company will deduct the balance premium for the year from the total claim amount.
The policyholder can claim tax benefits under Section 80D on the entire amount paid as premium under any payment frequency. He must keep the receipt of the down payment when purchasing the policy and the subsequent receipts to track the entire amount paid.
