Does Health Insurance Premium Increase Every Year on Renewal?

Several factors can increase your health insurance premium at renewal, including moving to a higher age bracket, increasing your sum insured, adding family members, purchasing add-on covers, rising healthcare costs, and insurer-wide premium revisions.

To estimate how these changes may affect your renewal cost, you can use a health insurance premium calculator, which helps you compare different coverage options and understand their impact on your premium before renewing your policy.

Here are the most common reasons why your renewal premium may increase:

1. Healthcare Inflation

Medical treatments, hospital charges, and healthcare services have become more expensive over time. According to an article in The Hindu, inflation in healthcare is growing at a rate of 14% every year. This includes overall costs such as the cost of medicines, hospital admission charges, the cost of various treatments, medical advancements, and so on.

Due to the rise in these expenses, insurers may increase premium rates in health insurance during renewal, even if your individual policy has not changed.

What can you do about it?

While healthcare inflation is largely beyond your control, you can review your coverage periodically to ensure it remains adequate for current treatment costs. The good news is that some insurers may offer renewal benefits, such as cumulative bonus or renewal discounts, depending on your policy terms and claim history, which can help avoid a part of the premium increase over time.

2. Moving to a Higher Age Bracket

Age is one of the most important factors that insurers consider while calculating premiums in health insurance plan during renewal. As people grow older, the likelihood of developing health conditions such as diabetes, hypertension, heart disease, arthritis, and other age-related illnesses generally increases.

Hence, if you move into a higher age bracket at the time of renewal, your premium may increase. For example, a person who purchased a policy at age 28 may pay a different premium after turning 38.

What can you do about it?

You can’t turn back time and turn younger, but what you can do is be mindful. Check your insurer premium chart before renewal and plan for the increase in advance. This can help you avoid last-minute surprises and budget accordingly.

3. Change in Coverage Benefits

During your health insurance renewal, you can choose to make changes in your coverage and benefits, depending on your insurer’s terms and conditions. If you choose to increase this coverage at renewal, your premium is likely to increase as well.

For example, you might decide to increase your sum insured in health insurance policy if you've been diagnosed with a condition that needs extra care. This will ultimately increase your sum insured.

What can you do about it?

Review whether your current sum insured is enough to cover treatment costs in your city. If healthcare costs have risen significantly since you purchased the policy, increasing your coverage may offer better financial protection despite the higher premium.

4. Adding Family Members to the Policy

If you add a spouse, newborn child, parents, or other eligible dependents to your policy at renewal, your premium may increase.

The extent of the increase depends on factors such as: 

• Number of members added
• Their age
• Their health profile
• Type of policy (individual or family floater)
• Sum Insured 

What can you do about it?

Compare the cost of adding a family member to your existing policy versus buying a separate policy. This is especially important when covering parents or senior citizens, as a separate senior citizen health insurance plan may sometimes be more suitable.

5. Purchasing Additional Covers or Add-Ons

Many insurers offer optional benefits, commonly known as add-ons in health insurance, that can be purchased at renewal for enhanced protection.

These may include critical illness cover, maternity cover, consumable cover, OPD cover, etc.

Since these benefits expand the scope of coverage, they are usually available at an additional cost, which increases your premium.

What can you do about it?

Choose add-ons based on your actual healthcare needs rather than selecting every available option. Focus on benefits that are relevant to your life stage and family situation.

6. Your Claim History

Some insurers do increase your health insurance premium depending on the number and amount of claims you’ve made during the year. However, this may not be the case with all health insurers.

If you have Digit’s health insurance policy, then you don’t need to worry as we don’t increase your health insurance premium based on the number or amount of claims you’ve made.

What can you do about it?

If your insurer does increase your premium based on your claim history, then there isn’t much you can do about it with your existing insurer as it is part of their terms and conditions.

However, you can consider porting to a different health insurer that doesn’t come with this condition. Porting is something you can only do during renewal, so evaluate other options and make your decision accordingly.

Many policyholders worry when their health insurance premium changes at renewal. However, several assumptions about renewal premiums are based on misconceptions. Understanding the facts can help you make more informed decisions about your coverage.

Myth 1: My Premium Will Always Stay the Same If I Don't Make a Claim

Fact: A claim-free year does not guarantee that your premium will remain unchanged. Renewal premiums may increase due to factors such as age progression, healthcare inflation, changes in coverage, or insurer-wide premium revisions.

Myth 2: Making One Claim Will Automatically Increase My Premium

Fact: In health insurance, a single claim does not automatically lead to a premium increase. Renewal premiums are influenced by multiple factors, including the insurer's pricing structure, age, coverage level, and overall claims experience.

Myth 3: The Cheapest Renewal Premium is Always the Best Option

Fact: A lower premium may come with lower coverage, higher deductibles, co-payments, exclusions, or fewer benefits. When comparing plans, evaluate the overall coverage and benefits instead of focusing only on the premium amount.

Myth 4: Health Insurance Renewal is Automatic, So There's Nothing to Review

Fact: Ideally, there are very few insurers who provide auto renewal options. Even if your insurer offers auto-renewal, you should still review your sum insured, add-ons, deductibles, family details, and renewal benefits before renewing.

Myth 5: Younger People Don't Need to Worry About Renewal

Fact: Even young policyholders should review their policy at renewal. Life events such as marriage, starting a family, or increasing healthcare costs can affect the type and amount of coverage required.