You may not need a health insurance when you are in your early 20s or 30s, but having an early insurance policy would go a long way in lower insurance premiums, wider coverage, and higher sum insured in your later years, when you are likely to need adequate health cover
It is believed that health complications usually arise as you grow older, which is why younger individuals often ignore buying health insurance. However, given changing lifestyles, the younger generation is also susceptible to the early onset of lifestyle diseases and even mental health issues. Then, there is the risk of injuries and accidents, and the cost of early pregnancy to cover.
“Young people are studying in different regions and are exposed to pollution, accidents, and other related risks. Health insurance provides financial assistance in case of any emergency,” says Sanjib Jha, CEO, Coverfox Group, an insurtech company.
Buying health insurance early in life has several benefits, besides the obvious one of covering the insured against any unforeseen health complications, according to industry experts.
According to Dr S Prakash, MD of Star Health and Allied Insurance, "A young person is usually healthy and does not have any comorbidities/health ailments. Therefore, if a person takes an insurance in his late 20s, he can benefit from lower premiums. Being young, the policy holder can easily overcome all inbuilt waiting periods including PED. In the absence of pre-existing diseases, a wider coverage is available for all health risks and incidents."
Here are some of these benefits.
Premiums are low when you are younger, as the risk to ailments is less.
After you attain 30 years of age, the health insurance premium increases after a block of five years. But before you hit 30 years of age, the block is of 10 years.
“From the age of 20 till 30, the premium amount is not changed by the insurer given the lower risk profiling. However, post the age of 30, the insurers increase the premium every five years,” says Jha.
Himanshu Pandya, Sebi RIA, founder, HP Private Wealth Advisory adbises that a separate health Insurance should be the top priority spent from the first salary, then from the second salary focus should be on creation of a sufficient emergency fund, the third salary onwards, planning for long term wealth creation can be done for the young fellow who is in his first job.
If you buy a health insurance policy when you are younger and have no or fewer diseases, the coverage will be wider. Usually, insurers have a waiting period until which they don’t cover any pre-existing diseases. Some policies do not cover certain pre-existing diseases. If you have a policy before you contract any disease, your policy is likely to cover it when the need arises.
Anuj Parekh, co-founder and CEO of Healthysure, an insurtech company, says, “Many young people don’t see health insurance as a priority, because they believe they are unlikely to make a claim. It is imperative to have coverage when you are fit and fine, rather than wait for any diseases or conditions to creep up later.”
The chances of claiming health insurance is lower at a younger age. For every such year, you get a no-claims bonus (NCB) benefit that usually gets added to the sum insured. NCB may increase the sum insured by up to 150 per cent.
Parekh explains through an example. If you buy health insurance of Rs 10 lakh and the product offers 20 per cent NCB per annum, at the end of the first year, the coverage will increase to Rs 12 lakh for the next year.
“If you buy a health insurance policy directly at age 30, without having any previous policy, then the premiums will be higher than what you would pay, if you had bought a health insurance earlier, on which you didn’t make any claim,” says Yogesh Agarwal, founder and CEO, Onsurity, an employee health insurance platform.
However, if you make a claim, the NCB gets cancelled. In the above example, the coverage will increase to Rs 14 lakh in the third year, but if you make a claim of, say, Rs 1 lakh, the coverage will reduce to Rs 12 lakh in the fourth year upon renewal.
According to Dr Prakash, "Taking a policy at a younger age will help the policy holder have all claims approved after the specific waiting period. If more people buy health insurance policies when they are young and healthy, insurance companies may not have the need to make frequent revisions to premiums. When premiums are maintained at lesser levels, it makes health insurance cover accessible for more people."
According to Amrit Singh, co-founder and chief revenue officer at Loop, a Maharashtra-based health insurtech company, it is likely that the sum insured won’t get reduced for someone who bought health insurance in the 20s and kept renewing it. Usually, getting a higher sum insured at an older age is difficult, especially for those with pre-existing diseases.
“The premium will be charged as per the age band in the future. But since he/she continued a policy, the sum insured will never be reduced even if he/she gets any disease or lifestyle disorder, as long as he/she continues to renew the policy,” says Singh.