Lifelong renewability

The worst thing a health insurer could do to an older policyholder is refuse the next renewal. That is the year they need the cover most.

Lifelong renewability takes that option away. Once a policy has been taken, the workbook says, the regulations require that the insurers provide mandatory lifetime renewal.

Two parts of that sentence matter. Once a policy is taken — the duty attaches at issue, so it protects people who are already insured, not people applying late. And lifetime — there is no age at which the insurer may simply stop.

The premium is a separate question. It may go up over time. But the workbook adds the crucial limit: by regulation this cannot be linked to claims being made. Getting ill does not raise your own price.

Chapter 7 turns this into advice. Take adequate health insurance with lifelong renewability even if there is premium escalation.

The three rules, as the workbook states them.

1. Mandatory lifetime renewal is required by regulation once a policy has been taken.
2. Premium costs may go up over time.
3. That increase cannot be linked to claims being made.

Why buying early is a separate decision from renewing forever. Renewability protects an existing policy. It does nothing for the price at which you first buy, or for what is excluded. The workbook gives the numbers:

And it warns that there will be additional costs for any health issues that may develop in this intervening period, over and above that doubling.

The waiting period, which renewability cannot shorten. Many diseases are covered only after a waiting period of 2 to 4 years. So taking cover before retirement starts helps, because the cover will already be available by the time the person retires. Someone who waits until 60 faces both the higher premium and a waiting period running into their mid-sixties.

What to do at each renewal. The workbook's instruction is active, not passive: increase the sum assured every time the policy is renewed, so that the cover stays adequate as age progresses.

What it does not cover. Health insurance policies in India, the workbook says, cover only hospitalisation and related expenses. Everything else — medicines, doctors' visits, tests, long-term care — needs a medical corpus.

The tax relief alongside it. Premiums paid on health policies qualify for deduction under section 126 of the Income-tax Act, 2025 (corresponding to section 80D of the 1961 Act), up to Rs 25,000 for self, spouse and dependent children where none is a senior citizen, and up to Rs 50,000 where the assessee or any covered family member is a senior citizen, subject to the applicable conditions.

And why it matters at all. Section 7.1, under Protection Strategies, calls health expenses one of the biggest drains on retirement income, and names health insurance with lifelong renewability as one way of protecting that income.

Two friends, both 45, both healthy, both thinking about health cover for retirement.

Mrs Kamath buys now. A Rs 5,00,000 policy at Rs 10,000 a year. Certain illnesses are subject to a 3-year waiting period, so she is fully covered by 48. She raises the sum assured at each renewal, as the workbook instructs, and by 60 she holds a Rs 15,00,000 cover on a policy that has been continuously in force for fifteen years.

At 68 she is hospitalised twice in one year and claims Rs 8,40,000. Her insurer must still offer her a renewal for the following year, and cannot load her premium because of those claims. Her premium does rise with age and medical inflation — which the regulation permits — but she cannot be priced out for having been ill.

Mr Kamath waits until 60. The same Rs 5,00,000 cover now costs Rs 22,000 — more than double — and in the intervening fifteen years he has developed high blood pressure, which adds a further loading or an exclusion.

Cover taken at 45: Rs 10,000 a year
Cover taken at 60: Rs 22,000 a year, plus the cost of any condition developed since 45

Worse, his 2 to 4 year waiting period now runs from 60. For the specified illnesses he is uncovered until somewhere between 62 and 64 — the first years of retirement, when his employer's medical benefit has already ceased and his income has stopped.

His lifelong renewability is just as good as hers from the day his policy is issued. It simply starts fifteen years later, at more than twice the price, with a gap in the middle.

Chapter 8, section 8.1.3 (Planning for Medical Costs), is where the rule and both premium figures appear, together with the waiting period and the instruction to increase the sum assured at renewal. Chapter 7, section 7.1, under Protection Strategies, names health insurance with lifelong renewability as a protection against health costs draining retirement income.

Expect a direct question on whether an insurer may decline renewal (no, once the policy is taken), on whether the premium may rise (yes, but not linked to claims), and on the 2 to 4 year waiting period. The premium comparison — roughly Rs 10,000 at 45 against Rs 22,000 at 60 for a Rs 5 lakh cover — is a printed pair of numbers and therefore very examinable. A scenario question asks why a person should buy health cover before retiring rather than at retirement.

• Renewability guarantees renewal, not a fixed premium. The premium may rise over time; the workbook says so in the same breath.
• But it cannot rise because you claimed. That is the regulatory limit, and it is the discriminating half of the answer.
• The duty arises once the policy is taken. It does not oblige an insurer to issue a fresh policy to a 70-year-old applicant.
• Rs 10,000 at 45 and Rs 22,000 at 60 are for the same Rs 5 lakh cover. Do not attach either figure to a different sum assured.
• Renewability does not shorten the 2 to 4 year waiting period. Buying early is what solves the waiting period; renewability is what keeps the policy alive afterwards.
• Health insurance covers hospitalisation and related expenses only. Out-of-pocket costs need a separate medical corpus, and answering "insurance" to a question about medicines and doctors' visits is wrong.
• Increase the sum assured at each renewal. A policy renewed for life at a sum assured fixed in 2005 is not adequate cover in 2035.
• Employer medical cover ceases on retirement unless the person worked with the government or a related agency, where cover continues in retirement. That is precisely why the individual policy has to exist.