Should I subscribe to a multi-annual mutual fund?

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Multi-year health insurance is a long-term alternative to annual health insurance. A multi-year policy, as the name suggests, will provide coverage for an extended term of two years or more. It generally allows policyholders to pay the premium for the next two or three years in one go when purchasing the policy, thus saving them from having to renew it every year. Although these policies have many advantages, you should also know that they also have certain limitations.

Advantages: The premium for a multi-year health insurance contract remains unchanged throughout the duration of the contract. This is particularly useful since insurers regularly revise their premium rates upwards. Thus, an insured is protected against any subsequent revision of the policy premium made by an insurer during the next two years.

Naval Goel, Founder and CEO of PolicyX.com, said: “Lately many health insurers have increased their policy premium. Those purchasing a multi-year policy will not have to pay the revised rates for at least the next two years. Choosing a multi-year policy and paying the premium for up to three years helps you lock in the premium amount.”

In addition, you can also benefit from a premium discount when purchasing a multi-year policy. Pooja Yadav, Chief Product Officer, Edelweiss General Insurance, said: “Insurers often give customers discounts for purchasing multi-year premiums. Discounts can typically range between 7% and 15% and translate into additional savings for buyers.”

Goel explains this with an apt example: “Take for example the case of a 30-year-old man living in Delhi who wants to buy health coverage from 5,000,000. If he buys an annual policy, he will have to pay a premium of 8,066 and this is set to increase every year. However, if he buys a three-year health insurance policy, he will have to pay 21,778 at one time, which saved him around 11% on the premium. “

These policies also offer tax advantages in which you can benefit from the single premium proportionally each year (over the two or three years) to obtain the advantages. Anup Bansal, Chief Investment Officer of Scripbox, said: “Under Section 80D of the Income Tax Act, one can enjoy tax benefits of up to 25,000 on health insurance premiums paid for self, spouse and children. However, under a multi-year health insurance policy, the single premium you pay can be prorated each year to take advantage of the tax advantage of your health insurance policy. » For example, if you paid a premium of 60,000 for a three-year multi-year policy, you can get a tax exemption of 20,000 per year until the policy expires. It therefore offers a double advantage: a tax deduction (which would ideally not be the case if the total premium exceeds the prescribed ceiling) as well as a rebate in the same year.

Cons: “You may end up with a loss if you have to buy a multi-year health insurance policy and then decide to cancel or transfer it after a year,” Yadav said.

Additionally, all health insurance policies have a waiting period, and the limits and benefits differ by insurer and policy terms and conditions. Some policies may cover certain illnesses after two years, while others may cover the same illness after four years. In such a case, switching to another font can become tedious.

In addition, the transfer will be of no use if the insurer lowers premium rates over the next two years.

Who should buy?

Opting for a multi-year policy is viable as it offers the relaxation of staying secure for a specified number of years without worrying about annual renewals.

Rakesh Goyal, director of broker Probus Insurance, said multi-year policies are ideal for policyholders looking to avoid the hassle of annual premium payments and the risk of missing their renewal date. Policyholders usually miss the renewal deadline and lose all benefits when they do not renew their policy on time or even skip the grace period. “Suppose you have a medical emergency during this time; you would be unable to make a claim and would have to pay from your savings. Therefore, such a policy protects you and your family against any medical emergency in the near future for the same premium amount,” Goyal said.

On the other hand, you should also understand that as your age advances, your insurance premium also increases. Thus, in such a case, a multi-year policy can be advantageous here since the premium remains the same throughout the duration of the policy, regardless of age. Bansal said, “If you were to purchase a multi-year health insurance policy, you can avoid higher premium revisions until coverage ends.” The policy can be renewed again at the revised prices after the expiration of its term.

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