More Mediclaim Buyers Use EMIs To Buy Policies

Non-life insurers are seeing rising demand for health policies under the equated monthly instalment (EMI) option. Insurers attribute this to reduced affordability due to a fall in income and job losses, even as the need for a cover has gone up due to the pandemic.

In September 2019, the Insurance Regulatory and Development Authority of India (Irdai) allowed companies to sell policies with monthly, quarterly or yearly mode of payment. After the Covid pandemic broke out, in April this year, Irdai directed insurers to extend this facility. Over a dozen companies now offer this option.

Most people opting for EMI mode are new-to-insurance customers. “As high as 40-45% in the EMI segment are first-time buyers. About 40% opt for health coverage of Rs 5-10 lakh, and another 40% opt for the Rs 25 lakh-Rs 1 crore sum insured,” said Policybazaar business head (health) Amit Chabra.

The average premium range is from Rs 7,000-18,000 per year. So the monthly EMI works out from Rs 580 to Rs 1,500. “It’s a prudent choice to opt for EMIs in these uncertain times. We are seeing the adoption of monthly mode more online. Customers prefer to opt for standing instruction or e-mandate,” says Chabra.

Over 70% of customers opt for family floaters. “With Covid, salaried people have lost their jobs or suffered pay cuts while self-employed have seen the loss of revenue and cash flow issues. The coronavirus pandemic has heightened fears. For many, the EMI option is the most prudent one,” said Gurdeep Singh Batra, national head (retail underwriting) at Bajaj Allianz General Insurance, which has offered an EMI option since August.

Insurers say that the EMI option costs 2% more to cover their increased working capital costs. “We have to send reminders, our staff has to contact customers. But it makes selling easier as a monthly payment of Rs 500-800 doesn’t really set someone back,” said Batra.

Sandip Ginodia , CEO

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