Maintaining one’s health insurance is as important as buying that cover in the first place. In India, health policies come with lifelong renewability as long as premiums are paid on time. But even a small lapse can dismantle that financial safety net entirely and force families to absorb steep medical bills on their own.
In a country where healthcare inflation consistently outpaces household income growth, continuity is not optional. The good news is it’s quite simple to do that. The recent regulations allow policyholders to opt for a multi-year health insurance policy spanning three to five years. Consumers have definitely warmed up to this change and show an increasing level of comfort with longer investment into their health insurance. Our data suggests that buyers increasingly opted for longer protection periods in 2025. Here’s all you need to know.
Saving on premiums
A multi-year tenure is also one of the most practical ways to manage premium escalation. As your age and health risks go up, so does your premium. So locking in a lower premium early has compounding benefits. And extending that lock-in for five years amplifies this benefit. Buyers can save close to one-fifth of the total payable premium when compared when annual renewals.
This becomes an even more important conversation at a time when chronic illnesses, lifestyle diseases and rising hospital costs are reshaping household healthcare spending.
Consider this situation. Thirty-two-year-old Garima from Mumbai opts for a ₹25 lakh health cover, which will roughly cost her around ₹13,000. Assuming no upward revision, it will still translate to a cumulative payout of around ₹65,000 over five years. A comparable five-year plan would cost close to ₹53,000 upfront, which brings down the total cost by ~19 per cent while insulating the buyer from interim price revisions. Multi-year policies function as a hedge against any uncertainty, which makes perfect financial sense in today’s environment with mounting healthcare crises.
Changing consumer outlook
Consumer behaviour is reflecting this shift toward longer commitment. Our trends show a strong uptick in buyers selecting extended tenures, particularly four-year and five-year policies. The uptake of four-year and five-year policies increased by 56 per cent and 62 per cent, respectively, in 2025. This points towards consumers viewing health insurance as an integral part of their financial planning and an indispensable long-term addition.
Premium changes also contribute to this behavioural change. However, these revisions are a natural part of a healthcare ecosystem where costs continue to rise. Roughly 53 per cent of customers see adjustments in the range of about 10 per cent, while another 38 per cent experience revisions of up to 15 per cent over time. Hospitalisation expenses have grown by over 11 per cent, and medical inflation in India has stayed around 14 per cent for several years now. For Indian households, where insurance penetration is still evolving and out-of-pocket medical spending remains significant, planning ahead becomes essential.
This is precisely where longer-tenure policies create financial stability by insulating families from frequent pricing cycles while ensuring uninterrupted protection.
Tax treatment
There is also a clear pricing and tax advantage when you look at multi-year plans closely. With 18 per cent GST no longer applying on individual health insurance policies, the upfront cost of buying a longer-tenure policy is already more efficient. When the built-in multi-year discounts are added to this benefit, the overall savings go even higher.
Other than that, paying for multiple years in one go does not mean losing annual tax benefits. The total premium can be spread across the policy tenure for tax purposes, which means that policyholders can claim deductions each year under prevailing rules. In short, you get the benefit of locking in a lower effective premium while still enjoying yearly tax relief. And if paying upfront feels heavy, the option of paying through installments is also available. So you can spread your premium monthly, quarterly or half-yearly even on long-term policies.
Simpler renewal
Needless to say, this also eases the renewal and logistical process for the policyholder. No annual paperwork is needed, no missed deadlines and no risk of losing accumulated benefits such as no-claim bonuses or completed waiting periods. For the same reason, extended policies are also very relevant for NRI consumers who buy from India. They can easily ensure coverage continuity for years regardless of where they are.
Similarly, the case becomes even stronger for senior citizens. Premiums tend to go up with age and this makes multi-year lock-in especially valuable. Senior citizens are already eligible for higher tax deductions and they can use multi-year policies to soften the financial impact of annual renewals while maintaining uninterrupted access to their policy.
The author is business head of health insurance at Policybazaar.com