Customers will be allowed part payment of health insurance premium, the sector regulator said on Thursday, in a move aimed at helping more people avail the benefits of medical security cover.
At present, customers have to make a single annual payment for any health insurance scheme unlike life insurance products which allow equated monthly instalments (EMIs).
However, for health insurance products, customers will only be allowed part payments and not EMIs, sources said. The facility is also likely to be extended to customers paying premium for their cars.
The absence of the part payment option is seen as the main reason for India’s poor medical insurance penetration. According to government data tabled in Parliament last week, only 18 per cent of the urban population is covered by any medical insurance. In rural areas, the figure is even lower at eight per cent.
The Insurance Regulatory and Development Authority of India (IRDAI), however, said insurance companies will have to apply for approval of schemes allowing the customers to pay premium in parts.
“The companies will have to file for the products with us and we will look into it,” IRDAI chairman TS Vijayan told Hindustan Times.
Private insurance companies have already warmed up to the IRDAI move.
“We have just got an approval from the IRDAI to do so…customers can pay their premium in installments…and they can choose the payment schedule,” said Shreeraj Deshpande, head of health insurance, Future Generali India Insurance.
M Ravichandran, president of insurance at Tata AIG General Insurance, said the company was looking at different options but added that at present it “does not allow customers to pay their premium in parts.
The government has underlined the need to expand the reach of insurance – both in life and non life segments.
In a move to encourage more people to buy health insurance products, finance minister Arun Jaitley raised the tax deduction limit under Section 80D from Rs 15,000 to Rs 25,000. For senior citizens, it was raised from Rs 30,000 from Rs 20,000.