New Health cover to cut premium in old age

Apollo Munich Health Insurance has introduced a health cover where part of the payment during the earlier years can be used to fund higher rates in future. The advantage for the customer in paying a higher rate now is that the premium is eligible for tax breaks and most youngsters do not use up the full amount of Rs 25,000 for this.

Unlike life insurance where insurers are allowed to ‘level’ the risk premium and charge a uniform rate, health insurance rates rise progressively with the age of the insured. While non-life companies cannot offer products with savings components, Apollo Munich has devised a Health Wallet plan where part of the premium goes toward reserve benefits. The reserve premium can be used to fund health-related costs not covered by insurance. Every year, the unused reserve amount gets carried forward and earns a 6% bonus. This accumulated reserve kitty can in turn be used to pay up to 50% of the renewal premium, after five continuous renewals.

To illustrate, a Rs 10,000 annual contribution towards reserve from age 30 will result in a cumulative reserve of Rs 8.48 lakh by age 60. This factors in the 6% bonus on the carried-forward amount every year.

The out-of-pocket expenses the reserve funds can be used for includes purchase of medicines, vaccinations, dental expenses, diagnostic tests, spectacles, contact lenses, medical devices like blood pressure and sugar monitors, and consultations with medical practitioners.