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Cutting your base health cover may reduce premiums marginally, but it can also shrink your bonus and weaken your overall protection.
A solid base cover with a top-up is safer than reducing your cover for small savings on premiums. (Photo Source: Instagram)
Health insurance policies have become a necessity today with the sharp rise in medical costs in the last few years. An unexpected hospitalisation or medical emergency may push anyone into a financial crisis by wiping out savings. However, a sharp rise in health insurance premiums, especially for senior citizens, remains a major concern for potential customers and existing policyholders.
It could be financially overwhelming for many, especially senior citizens, where even a small jump in premiums can hurt their budget. In order to reduce renewal premiums, many policyholders often opt for reducing the base sum insured (SI).
For example, if your base cover is Rs 10 lakh, you may opt for Rs 6 lakh to reduce the premium. And if you already have a super top-up policy for a higher amount, it may offer additional coverage.
It may sound logical to ease the overall health insurance premium burden. You may think, “I already have a top-up plan, plus I’ll still get extra coverage from the no-claim bonus, so why should I pay for a high base cover?”
A reduction in base sum insured may bring down your health insurance premiums, but it may lead to some adverse results. Here are a few important factors to be taken into account before opting for reducing base sum insured.
Lower base cover reduces your bonus
Insurers offer a bonus, called a cumulative bonus or no-claim bonus, to existing policyholders if there is no claim in a year. But, this bonus is linked to your base cover. Usually, the maximum bonus you can get is about 50 per cent of your base sum insured. When you opt for reducing the base SI, your bonus may also come down.
For instance, if your base is Rs 10 lakh, your bonus can go up to Rs 5 lakh. But if you reduce the base to Rs 6 lakh, the maximum bonus drops to just Rs 3 lakh.
Also, remember that bonuses are not permanent. If you make a claim, the bonus can be reduced the next year. This means you can’t depend on it the same way you rely on your base cover. That is why the base sum insured is always more reliable than the bonus.
Marginal savings, lower coverage
With a reduction in base SI, the health insurance premium on your existing policies may become lower. However, when you compare it with your original base SI, you would have enjoyed the enhanced coverage and benefits at a nominal premium. In reality, the reduction in the premium amount may not be significant. Insurers design premiums in a way that higher base covers remain attractive. So, you may not end up saving a huge amount after the reduction in premium. However, you will lose out on long-term security.
What you can do if the premium feels too high
If you really want to reduce your cover and your current insurer doesn’t allow it, a few simple ways could be helpful. You can try migrating to another plan with the same insurer, or you can port your policy to another insurance company. Porting also carries forward waiting periods, so you may not need to start everything from scratch.
To conclude, reducing your base cover may look like a smart way to save money, but it comes with several risks. A higher base sum insured, along with a super top-up, is usually the safest and most cost-effective strategy in the long run for policyholders, especially senior citizens.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
Delhi, India, India
September 06, 2025, 12:00 IST
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