Lock-in your premium until age 55: New feature in health plans explained

Last week,  private health insurer Galaxy Health launched its maiden health insurance plans, including one that promises to lock in premiums. The Galaxy Promise Plan is available in three variants—Signature, Elite, and Premier—designed to provide comprehensive and customizable protection. 

 

The two standout features is the Unlimited Restoration of Sum Insured and the Premium Promise. 

 

The first allows multiple claims within a policy year to ensure ongoing financial security for both new and recurring health conditions.

 

The second locks in premium rates until age 55 or until the first claim.  

 

Locked-in premiums in health insurance plans refer to a feature that allows the premium rate to remain fixed at the age you first purchase the policy, up until you make your first claim, or turn 55, whichever is earlier.

 

 

This means that even though health insurance premiums typically increase as you get older, your premium will stay the same as it was when you first enrolled, as long as you haven’t filed a claim.

 

For example, if you were to buy a health plan at the age of 33, your premiums will not increase solely due to your age until you file a claim or turn 55, whichever is earlier. 

 

The move is aimed at bringing younger people into the insurance coverage ambit. 

 

Here are the key features: 

Locked-in Premium at Entry: When you buy a health insurance policy, the premium is locked at the age you enter the plan. For example, if you purchase the policy at the age of 30 and your premium is Rs 15,000, this same premium will be charged to you during subsequent renewals, provided you don’t make a claim or until you turn 55.

 

No Mid-Term Premium Increase: During the term of your policy, if you don't make any claims, your premium will not increase even as you get older. This helps you avoid the usual rise in premiums due to age or health conditions.

 

Change After a Claim: However, if you make a claim, the insurance company will then adjust your premium to reflect your age at the time of the renewal or when the claim is made. This means that if you’re 40 years old and make your first claim, your premium will change to that of a 40-year-old at the time of renewal, regardless of the rate you were paying as a 30-year-old.

 

Should you opt for such features? 

While locked-in premiums can offer long-term savings, they should not be the only factor you consider when choosing a health insurance policy. It's important to also evaluate other core features of the policy such as coverage limits, sub-limits on room rent, the insurer's reputation for handling claims, product flexibility and the insurance company's track record with claim settlement. 

 

Medical inflation: In some cases, insurance companies may revise the pricing structure of their policies due to factors like medical inflation. If the insurer revises the product pricing, the new premium will be based on your original age slab, but adjusted according to the revised premium structure. For example, if the premium for the age group 31-35 years increases by 5% over the years, your premium will still be based on the 31-35 years age band (not the higher age band), but it will reflect the revised rates, not the original rates.