Deferred Health Insurance: Everything to Know About It

To defer, or not to defer?

This is the question you might be seeking an answer to.

After all, deferred insurance plans offered by insurance companies are in trend these days.

Under such plans in India, the maturity amount is paid out over a period once the policy ends.

Such policy refers to saving money for paying health insurance premiums at an old age.

For instance,

Say, you are 30 years old. You earn good monthly income today. But, things won’t remain the same in your twilight years.

• You won’t be employed.
• You won’t have a source of income.
• You won’t be as healthy as you’re today.
• You won’t have employer health insurance.
• You won’t get health insurance at a cheaper price.

Thus, after the retirement, the expenses incurred for health care would drain a much larger share of your pension. This could lead to a dramatic rise in your post-retirement years when you’ve no access to the source of income for health care.

On the flip side, the steady increase in medical costs in India is taking a financial toll on everyone, especially, the lower and the middle-class family. Analytical reports reveal that medical inflation outranks the overall inflation by miles.

Have a look,

• The overall inflation has been growing at a rate of 6.5% during the last five years.
• On the contrary, medical inflation showcases an annual growth rate of 15%.

So, by the time you’ll retire, the triple whammy of health care costs that may have spiralled to astronomical proportions may hit you adversely. This may be likely to keep a dent in your retirement corpus and is something you need to plan for.

Also read about Top-Up Health Insurance

Hence, saving for old age health care needs in your earning years is essential. This may seem to you too far ahead, but it’s essential.

How Deferred Health Insurance Can Help

Deferred Health Insurance is superior. Here are some basic reasons why going for deferred health insurance can help you in future.

• Deferred insurance is long-term, unlike your employer health insurance cover.
• It is helpful after retirement when health insurance premiums are expensive.
• It financially helps you after you retire and when you won't be eligible for any employer health insurance plan
• Health insurance comes with too many exclusions, it’s pointless after retirement. But, if you purchase insurance in advance, new exclusions will not apply.
• If you purchase insurance for your retirement now, then you will be covered and don't need to go looking for new insurance products after retirement.

Eligibility Criteria

Deferred health insurance is available for people between 18 years and 55 years. The financial benefits can be availed upon maturity.

Point To Remember

There are things that a good insurance company may address you before issuing deferred insurance in your name as a product.

• Considering a risk of morbidity (the condition of a critical illness) 20-25 years into the future. Insurers should make sure whether the probabilities will change because of environmental/ social conditions.
• They should tell the ticket size of the sum insured. For example, how much a heart attack cost, should there by a cap on the indemnity amount, etc.
• They should explain whether the product should be structured as an indemnity or defined benefit.
• They need to clarify if the periodic health checks during the waiting period can be mandated for the insured or not.
• They can tell whether or not you can use it to adjust premium, cover amount.

In the absence of such product or if you won’t tend to buy deferred health insurance, setting aside a certain corpus to pay high health insurance premiums in your old age is essential. Or you should save sufficiently for old age health care spends.

Click to know what Group Health Insurance is. 

It is advisable to go for a regular medical check-up - at least once every year. And don’t ignore taking the requisite steps for a healthy lifestyle.

Let’s us know your opinion about Deferred Health Insurance!

Also Read

Are Spouses Allowed to Split Health Insurance Premium to Claim Tax Benefit Under Section 80D?

9 Most Common Myths and Truths About Health Insurance in India!