Taking health insurance has become expensive. Paying its premium is becoming a burden on people's pockets. Due to the increasing cost of insurance premium, people are taking loans to maintain or increase their health cover. Many startups providing loans are giving loans to thousands of people every month for premium.
The cost of health services in the country has increased and the premium of health insurance taken to cover it is also no less expensive. The situation is such that due to the increasing cost of insurance premium, people are trying to maintain or increase their health cover by taking loans.
According to a report in Economic Times, startup companies like Finsall, Bimpay Finsure and InsurFin are financing insurance premiums. Finsall and Bimpay are adding around 7000 new customers every month. The average loan amount for each customer is Rs 40,000. The interest rate on this ranges from 12% to 16% depending on the credit profile of the customer.
High demand in small cities
According to BimaPay CEO Hanut Mehta, 70% of their customers come from small cities like tier-2 and tier-3. 30% of these people have never taken a loan before. He said, people can increase their insurance coverage and get better protection by using easy payment options.
25% increase in premium
According to insurance industry estimates, the health insurance premium of 52% of policyholders has increased by 25% in the last one year. Finsall CEO Tim Matthews said that healthcare expenses are increasing every year since Covid. A recent report puts inflation in the health sector at 14%. Due to this, the youth are also preferring to take a bigger health cover for their families and are opting to pay it in installments. Finsall has tied up with 15 insurance companies.
Most customers are in the age group of 40 to 50 years
InsurFin, which was started just four months ago, said that the average loan amount is Rs 55,000. According to CEO Chittaranjan Savadi, most of the customers are in the age group of 40 to 50 years, who want to take a bigger insurance cover due to rising healthcare costs. Apart from this, insurance agents are also contacting so that they can avail this facility for their customers.
What is the guideline of IRDA?
The insurance premium also increases with age. There is a huge increase in premium for people above 60 years of age. Keeping this in mind, IRDAI issued new guidelines in January 2024. According to this, insurance companies cannot increase the premium of people above 60 years of age by more than 10% annually, unless prior approval is taken for it.
IRDA says that people of this age are most affected by the increase in premium rates. Meanwhile, the GST Council is also looking at the proposal to exempt health insurance premium paid by senior citizens from GST. Also, tax exemption is being considered on health insurance premium up to Rs 5 lakh.