Health Insurance: Monthly Payments Surge In Tier 3 Cities

The trend toward monthly payment mode in health insurance signifies a significant shift in customer preferences, driven by affordability, convenience, and increased awareness.
Health Insurance, Payments,  instalments
Health Insurance, Payments, instalments

Data from Policybazaar indicates a significant surge in the adoption of monthly payment modes, especially among young salaried individuals aged 26 to 35. A staggering 33 per cent of this demographic prefer the flexibility of monthly payments, allowing them to manage their finances more effectively. This preference is further emphasized by the fact that 80 per cent of male customers opt for monthly instalments, compared to only 20 per cent of their female counterparts.

“Earlier health insurance premiums were settled annually or bundled for two or three years, requiring a lump-sum payment in one shot. Many insurance providers now provide health policies with instalment options, allowing monthly and quarterly payment modes while retaining the same benefits. Premiums can be conveniently paid using credit cards, debit cards, or UPI e-mandates,” says Siddharth Singhal, business head - health insurance,

There is also a regional disparity in payment preferences, with tier 3 cities leading the trend. In these areas, 44 per cent of individuals opt for monthly payments, highlighting the importance of affordability and financial flexibility in regions with more pronounced economic constraints. Formerly dominated by annual or multi-year lump-sum payments, the landscape has evolved to accommodate monthly and quarterly payment options. This trend reflects changing customer preferences driven by affordability, convenience, and increased awareness about the importance of health insurance coverage.

Several factors contribute to this shift. Firstly, introducing instalment premium options by insurance providers addresses the affordability challenges many individuals face. Policyholders can manage their cash flow more effectively by spreading out payments over time without compromising coverage. This is especially crucial in tier 3 cities, where financial constraints may hinder the ability to make lump-sum payments.

“In the past few years, due to inflation, health insurance premiums have increased, prompting insurance companies to introduce monthly or quarterly payment options. This is a welcome move catering not just to the urban masses but to customers’ evolving needs, particularly from tier-2 and tier-3 regions, where the instalment choice proves more beneficial. This convenient option allows individuals to effectively manage their health insurance premiums, ensuring uninterrupted coverage even amidst price pressures,” adds Singhal.

Moreover, increased awareness about the importance of health insurance, particularly in the wake of the pandemic, has led to a greater emphasis on securing adequate coverage. As individuals seek higher sum insured policies, the option for monthly payments becomes increasingly attractive, allowing them to obtain comprehensive coverage without straining their finances.

Despite the slight premium increase associated with monthly or quarterly payments, the benefits outweigh the costs for many individuals. The flexibility afforded by instalment options ensures uninterrupted coverage and peace of mind, even in fluctuating financial circumstances.

The evolving demographic landscape of health insurance purchasers is also worth noting. While historically dominated by male customers, there’s a gradual shift towards more active engagement from women in purchasing health insurance for their families. This diversification of decision-makers reflects changing societal norms and highlights the importance of catering to the needs of all demographics.

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