Health insurance premiums often increase yearly due to multiple factors. While this can seem frustrating, understanding the reasons and exploring options to lock premiums can help you make better financial decisions. Here's everything you need to know:

1. Why Do Health Insurance Premiums Increase Every Year?

Health insurance premiums typically rise due to a combination of factors, including:

A. Age of the Policyholder

• Insurance costs increase as you age because the risk of illnesses and medical claims rises.
• For example, a 40-year-old pays more than a 30-year-old for the same policy.

B. Medical Inflation

• The cost of healthcare, including hospitalization, medicines, and treatments, rises yearly.
• Insurers adjust premiums to cover these increasing costs.

C. Claim History

• If you’ve made a claim, insurers might increase your premium at renewal to offset the higher risk.
• No-claim bonus plans may offer discounts if you haven’t made claims, but these may not completely shield you from hikes.

D. Lifestyle and Health Conditions

• Unhealthy habits (e.g., smoking) or a new diagnosis can lead to higher premiums upon renewal.

E. Regulatory Changes or New Features

• Adding benefits, changes in government regulations, or new taxes can contribute to increased premiums.

2. Can You Lock Your Premiums?

Yes, there are ways to lock premiums or mitigate yearly increases. Here's how:

A. Multi-Year Policies

• Opt for a health insurance plan with a multi-year tenure (e.g., 2-3 years) to lock in premiums during that period.
• Benefit: Save on annual hikes and sometimes enjoy discounts for upfront payments.

B. "Premium Lock-in" Plans

• Some insurers offer policies with premium lock-in features, where your premium remains unchanged until you make a claim.
• Example: Even if healthcare costs rise, your premium won’t increase unless you claim.

C. No-Claim Bonus (NCB) Add-ons

• Add-ons like NCB protect your premium from increases if you don’t make a claim.
• While this doesn’t lock the premium completely, it minimizes the impact.

D. Term Insurance Premium Lock

• If you’re considering term insurance, premiums are fixed for the policy tenure when you buy the plan.
• Example: A 20-year policy bought at age 30 locks in the premium until age 50.

3. Factors to Consider When Choosing a Lock-in Option

1. Upfront Payment: Multi-year policies require paying in advance, so ensure your budget allows it.
2. Policy Terms: Check if the lock-in applies to all types of increases (age, inflation, claims).
3. Renewal Discounts: Some insurers offer loyalty discounts or rewards for early renewals.

4. What Can You Do to Control Premium Increases?

• Buy Early: The younger you are, the lower your premium. Lock in affordable rates early.
• Stay Healthy: A healthy lifestyle can prevent premium hikes related to new medical conditions.
• Compare Policies: Regularly evaluate policies to find one that offers better benefits at a competitive price.
• Choose the Right Sum Insured: Avoid over-insuring; pick coverage that matches your needs.

6. Conclusion: Plan Smart to Manage Premiums

Premium increases are inevitable, but with strategies like multi-year plans, premium lock-in features, and healthy lifestyle habits, you can minimize their impact. Start early, choose the right policy, and explore options that align with your long-term financial goals.

Tip: Always review your policy’s terms and conditions to understand potential hikes and locking options.