Why buying multi-year policies in health insurance makes financial sense

With health insurance premiums rising steadily due to medical inflation, locking in a policy for three to five years can offer substantial long-term savings. For young individuals, this strategy is especially beneficial—they can secure lower premiums now and avoid future hikes as they grow older and risk profiles change.

Multi-year health insurance policies are long-term plans that offer coverage for a 3 to 5-year period under a single premium payment or structured payment schedule. Increasingly popular among policyholders, these plans are now widely offered by leading insurers as a smart alternative to annual renewals.

A multi-year health insurance plan also comes with added convenience—no need for annual renewals, reducing the risk of policy lapses. Many insurers now allow policyholders to pay premiums in EMIs without losing out on multi-year discounts, making it easier to manage cash flow while still enjoying the benefits of discounted pricing.

Overall, multi-year policies offer cost stability, convenience, and better budgeting options, making them a smart choice for anyone looking to future-proof their health coverage.

Insurance expert Nikhil Jha, in a post on social media X, noted: "Multi-Year policies in Health insurance helps save premiums. Insurers now offer 3-5 year policy term. We always suggest buying health insurance policies for Multiple years i.e. 3 years or 5 years. It helps you save against future premium hikes from the insurer."

He further noted one can save up to 17-18% in premium payment if he pays in one go. This would give investors a discount and also save them from future premium hikes. 

On the flipside, he noted that if the insurance holder decides to port the policy to another insurance company, there would be no refund in the premium. 

> What are Multi-Year Health Insurance Policies?

Unlike traditional health insurance plans that require annual renewal, multi-year policies provide extended coverage for a longer duration — typically three to five years. The sum insured and policy benefits remain intact throughout the term, and you are not required to renew the policy every year.

> Key Benefits for Policyholders:

Protection Against Premium Hikes: Medical inflation and rising healthcare costs often lead insurers to revise premiums annually. By opting for a multi-year plan, you effectively lock in the current premium rate, shielding yourself from future price increases during the policy term.

Convenience: With fewer renewals to manage, multi-year policies reduce the risk of missing renewal deadlines — which can lead to coverage lapses and loss of continuity benefits.

Discounts on Premiums: Many insurers offer attractive discounts on multi-year premiums, making them more cost-effective over time compared to yearly payments.

Tax Benefits: Premiums paid for multi-year policies are also eligible for tax deduction under Section 80D of the Income Tax Act. If paid as a lump sum, the deduction is distributed proportionally across the policy years.

> Who Should Consider Multi-Year Policies?

Multi-year policies are ideal for individuals who are financially stable, looking to secure long-term protection, and want to mitigate future cost uncertainties. They are particularly useful for senior citizens, families with children, and individuals in early career stages looking to build consistent health coverage.

If you're in the market for health insurance, choosing a 3- or 5-year plan is not just about convenience — it's a strategic financial move that ensures peace of mind and guards your wallet against inflation-led premium spikes.