Health insurance has become a necessity with medical costs rising every year. Whether it’s a simple hospitalization or a critical illness, having health coverage reduces financial stress. With premiums increasing regularly, choosing between annual and multi-year health insurance plans becomes crucial. Let’s break down how multi-year plans can offer significant savings and stability over traditional annual plans.
Why Rising Premiums Make Health Insurance a Priority
Health insurance premiums are not static—they increase with age, inflation, and additional health risks. This makes it important to lock in coverage at an early age. For example, a 20-year-old pays much less for a policy compared to a 40-year-old. As you age, insurers also evaluate factors like pre-existing conditions, chronic illnesses, and lifestyle habits, which can further increase premiums.
Delaying health insurance not only raises costs but also increases the risk of policy rejections due to health complications. Therefore, buying a policy early—whether annual or multi-year—offers both financial and health benefits.
Annual vs Multi-Year Health Insurance: How They Work
Annual Plans
Annual health insurance policies require you to renew your plan every year. You can pay the premium in one go or opt for monthly installments. While this offers flexibility, it exposes policyholders to premium hikes during renewal.
Multi-Year Plans
Multi-year health insurance allows you to pay premiums for 2 to 5 years upfront or through EMIs. This option locks in the premium rate for the chosen term, protecting you from future increases. Additionally, many insurers offer discounts of up to 17-18% on multi-year plans, making them more cost-effective.
Example: Comparing Costs for Annual and Multi-Year Plans
To understand how multi-year plans save money, let’s look at Javed, a 30-year-old from Delhi, who wants a health cover of ₹10 lakh. Here’s how annual and multi-year premiums compare across leading insurers:
| Insurer | Plan | Annual Premium | 3-Year Plan (One-Time) | 5-Year Plan (One-Time) |
| Care Health Insurance | Care Supreme Direct | ₹11,546 | ₹32,625 | – |
| Niva Bupa Health Insurance | Aspire Gold+ (Direct) | ₹9,508 | ₹28,015 | – |
| Star Health Insurance | Super Star | ₹8,667 | ₹24,051 | ₹38,785 |
| Aditya Birla Health | Activ One Combo | ₹9,680 | ₹26,131 | – |
| ICICI Lombard | Elevate Value | ₹6,602 | ₹19,001 | – |
Example Breakdown:
If Javed chooses Star Health Insurance’s annual plan (₹8,667/year) and renews it for 5 years, his total cost will be ₹43,335. However, opting for the 5-year multi-year plan costs only ₹38,785, saving him ₹4,550 over the same period.
Benefits of Choosing Multi-Year Health Insurance
1. Savings on Premiums
One of the most significant advantages of multi-year plans is cost savings. By locking in rates, you avoid annual premium hikes caused by inflation or rising medical costs. For young policyholders, this ensures affordable coverage for multiple years.
2. Financial Stability
With a fixed premium for the policy term, you can plan your health expenses without worrying about annual increases. This is particularly helpful for people on tight budgets.
3. Convenience and Time Savings
Multi-year policies eliminate the hassle of yearly renewals. This reduces the risk of missing renewal deadlines, which can lead to policy lapses.
4. Long-Term Discounts
Insurers often provide multi-year discounts ranging from 5% to 18%, making these plans more affordable in the long run.
5. No-Claim Bonus (NCB)
Multi-year plans accumulate a No-Claim Bonus (NCB) for every claim-free year within the policy term. This bonus increases the sum insured, offering better coverage without additional costs.
Who Should Consider Multi-Year Plans?
- Young Professionals: People in their 20s and 30s benefit most, as they can lock in lower premiums and enjoy long-term savings.
- Families: Multi-year plans reduce financial stress for families by ensuring uninterrupted coverage.
- People with Stable Finances: Those who can afford a one-time payment or fixed EMIs find multi-year plans more rewarding.
Key Considerations Before Opting for Multi-Year Plans
1. Coverage and Benefits
Ensure the policy includes:
- Critical illness coverage
- Hospitalization and daycare procedures
- OPD benefits for outpatient consultations and diagnostics
2. Claim Settlement History
Choose insurers with a high claim settlement ratio and transparent processes.
3. Flexibility
Check if the plan allows riders or add-ons like OPD coverage, maternity benefits, or consumables cover for items like masks and gloves during hospitalization.
4. Premium Adjustment After Term
Understand how premiums may change after the multi-year policy ends.
Add-On Options for Better Coverage
1. OPD Add-On
Covers routine consultations, diagnostic tests, and medicines, reducing out-of-pocket expenses.
2. Critical Illness Rider
Provides additional coverage for major illnesses like cancer or heart disease.
3. Consumables Coverage
Covers non-medical costs such as syringes, gloves, or masks, which are often excluded in base policies.
Expert Opinions on Multi-Year Plans
Siddharth Singhal, Policybazaar
“Young people with lower health risks can benefit significantly from multi-year health plans. By paying upfront, they can save money and protect themselves from rising premiums.”
Rakesh Goyal, Probus Insurance
“With premium rates increasing every year, multi-year health insurance offers peace of mind and stability. It eliminates the need for frequent renewals and ensures uninterrupted coverage.”
Pankaj Navani, CarePal Secure
“Multi-year plans allow policyholders to accumulate a higher No-Claim Bonus over time, making it a valuable choice for those who don’t frequently use health services.”
By choosing a multi-year health insurance policy, you not only secure comprehensive health coverage but also protect yourself against inflation and rising premiums.
