Galaxy Health Insurance’s initial products have a feature that locks policyholders’ premiums at the age of entrance until they file a claim. Individuals will save money on premiums by paying premiums assessed to younger age groups, which will be lower. While you can consider this feature when purchasing a policy, it should not be the only factor determining your selection.
Galaxy Health, a newly established standalone health insurer, recently launched its first health insurance plans, including one that promises to lock in premiums.
The ‘Premium promise’ feature is one of the products’ key offerings; it is included in the Signature variant but must be purchased separately as an add-on under the ‘Elite’ plan.
This is how it works: if you were to get a policy at the age of 35, your premiums will not increase entirely due to your age until you submit a claim or turn 55, whichever is earlier. “This is mainly to bring younger people within the insurance coverage area. This will raise awareness, allow for early entrance, and encourage people to stay for a longer period of time,” says G Srinivasan, MD and CEO of Galaxy Health Insurance. Niva Bupa introduced a comparable function called ‘Lock the Clock’ as part of its Reaassure 2.0 plan in 2022.
No age-based premium increases until claims
Health insurance renewal costs typically rise in response to insurers’ claim experience, healthcare inflation, and policyholders’ age range. However, because these businesses pledge to freeze age-related premium increases, the policyholder’s age is locked in until she files her first claim.
“When purchasing an insurance, the premium is locked in at the time of entrance. According to Srinivasan, the same premium will be charged for consecutive renewals until a claim is paid or the age of 55 is reached, whichever occurs first. The company will provide this benefit to insurance seekers up to the age of 50. “No additional premium will be paid in the midst of the tenure in the event of a claim. “The premium will be charged at renewal (or in the case of a claim) based on the insured’s current age,” he says.
The fine print
Does this indicate that if you were a 30-year-old paying an annual premium of Rs 15,000, you would continue to pay the same premium until you filed a claim? Not necessarily. “In exceptional circumstances when the product pricing is revised, the premium will be charged based on the original age slab of the revised product,” according to Srinivasan.
If the product pricing increases by 10% after ten years, you will be charged the premium equivalent to a 30-year-old under the revised rate structure.
For instance, let’s say you bought the policy when you were 32 years old, and the premiums were Rs 10,000 for the age group of 31 to 35 and Rs 15,000 for the age group of 41 to 45. Ten years later, let’s assume the insurer increased the premium for your age group (41–45 years old) by 10% because of medical inflation. The new rates were Rs 11,000 for those aged 31–35 and Rs 16,500 for those aged 41–45. According to Srinivasan, the insured will have to pay a premium of Rs 11,000 rather than Rs 16,500, as would be the case in the absence of the premium promise or lock-in clause.
Consider features other than the premium freeze
Individuals will undoubtedly save money on their premium outlay if they choose to pay the reduced premiums charged to younger age groups. Although you can consider this feature when purchasing a policy, it shouldn’t be the only factor affecting your choice. Policyholders would generally be better off concentrating on the essential components of a health policy, such as financial restrictions, room rent sub-limits, and—above all—the insurer’s history of product or feature withdrawal and claim settlement, rather than “innovative features.” According to Mahavir Chopra, the creator of the insurance platform Beshak.org, it is always preferable to wait a few years to evaluate a new insurer’s overall track record.