What is the Right Age to Buy a Health Insurance Policy?

Popular opinion is that you don’t need health insurance when you are fit and fine. The reasoning is this: “Why should you pay for an insurance policy when you are at the peak of your physical fitness?” Or “I am young, have other priorities in life. Haven’t really listed health insurance at the top of my priority list.” In this article, we’ll discuss why such reasoning is misplaced and farther from reality.

Delaying your health insurance purchase is disadvantageous for the following reasons:

a. Waiting Period: Insurers do not unlock the full value of a health insurance policy from the word go. In other words, certain pre-existing diseases do not receive coverage immediately after subscribing to a health insurance plan. There is a waiting period – usually 4 years – before which certain illnesses receive insurance coverage.
b. Higher Premium: The more you postpone your decision to buy a health plan, the higher will be your premium. Your health insurance premium will be lower at a younger age. This is a direct monetary consequence/impact of delaying your health insurance purchase. For example, if you opt for a health insurance plan with a sum assured of Rs.5 Lakhs, you would perhaps pay 1.5% of the sum assured as premium at the age of 25. The premium amount can shoot up to 15% of the sum assured for the same health plan if you were to purchase it at the age of 60.
c. Cover cessation: Insurers have a minimum age at entry for insurance policies. Health insurance is no different. If you cross the cover ceasing age, you cannot enjoy the benefits of the health insurance.

While we have discussed some of the fallouts / consequences of delaying the purchase of a health insurance plan, let’s look at some of the benefits of buying a health insurance policy early:

i. Medical Checkup: If you propose to buy a health insurance policy at a young age, insurers usually do not enforce medical examination – which is otherwise mandatory for older people.
ii. Comprehensive Plan: One can avail the benefits of a comprehensive health plan at a lower premium.
iii. Premium Lock-in: If you subscribe to a health plan quite early in life, you have the advantage of locking in on a premium amount. Subsequent premium alterations will be based on your current premium as the base price.
iv. Lower Coverage costs: Coverage costs increase with age. At a younger age, the possibility of having had surgery or medical background – such as diabetes, hypertension, etc. – is very slim. This lowers your coverage cost. For instance, your premium amount payable will not be impacted, if you become a diabetic a few years post subscribing to a health plan. On the other hand, if you decide to buy a health cover when you already have a medical history, then your premium burden will be much higher.
v. Regulatory Cushion: The Insurance regulator, IRDA, has stringent guidelines around how insurers operate. These guidelines are formulated keeping consumer interest in mind. Therefore, if you have bought an insurance policy early in life, an insurer cannot deny renewal of your policy on the grounds that the premium amount is low, etc. – provided you renew your policy within the stipulated time.
vi. Upper Age Limit: Health insurance policies prescribe an upper age limit. If you have subscribed to a policy at an early age, you will enjoy the benefits longer.
vii. Cumulative Bonus: If you have subscribed to a health plan early on in life, you can enjoy the cumulative bonus accrued at renewal – provided there have not been any intermittent claims.
viii. Tax Benefits: Health insurance comes with tax benefits as well. You can claim tax relief under section 80 D of the Income Tax Act. Not to mention, the sooner you subscribe to a health plan, the sooner you can avail these benefits.
It is wrong to assume that young and healthy people do not require health insurance. Emergencies can come calling at any time without any warning. Medical bills resulting from an accident can run into lakhs of rupees. If you have not secured yourself with a health insurance policy and do not have corporate health insurance at your place of work (for those who are employed), such expenses can wipe out a huge chunk of your savings or land you in debt. Therefore, there is no “right age” to go for a health insurance plan. The sooner you subscribe to one the better it is.