Why your health insurance premium went up at renewal, and what you can do

Why does health insurance premium increase every year?

Premiums usually rise for one of four reasons: your age, a product-wide price revision, a change you made to the policy, or a discount that has ended. Your own claims are not one of them for an individual policy.

• Age bands. Most products price members in age bands, such as 41–45 and 46–50. When you or a family member moves into the next band, the premium steps up even if nothing else changes. In a floater, the oldest member’s age often drives the price.
• Product-wide repricing. Under IRDAI’s 2024 Insurance Products Regulations, each product is reviewed by the insurer’s Appointed Actuary at least once a year. Any revision of premium rates must be based on credible claims experience. The change is approved by the insurer’s own Product Management Committee and applies to everyone on that product.
• Changes you made. A higher sum insured, a new add-on or rider, or an added family member all raise the premium. Some products also price by city or zone, so moving can change it.
• Discounts that end. A claim-free discount, a family discount or a long-term discount may not continue at renewal. These vary by policy.

Hospital costs drive most repricing. IRDAI’s January 2025 circular on senior citizens’ premiums notes that premium rates depend mainly on expected claims, which depend largely on what hospitals charge.

Big jumps are common. A LocalCircles survey of about 11,000 people, reported by Outlook Money in May 2024, found that 52% of respondents with health insurance saw their premium rise by more than 25% in the previous 12 months, and 21% by 50% or more.

Example: how a 30% increase builds up

Example. You paid ₹20,000 last year for ₹10 lakh of cover at age 45. This year you turn 46, and the insurer has also revised the product’s rates. The percentages are illustrative.

Neither step depends on whether you claimed. Ask your insurer for this kind of break-up whenever the increase looks large.

Can the insurer increase my premium because I made a claim?

Not on an individual policy. IRDAI’s 2024 Insurance Products Regulations say renewal loadings for individual products must be at portfolio level, not based on any individual policy’s claim experience. The same rules say renewal can’t be refused because you made a claim in earlier years, and the insurer can’t underwrite you afresh at renewal unless you increase the sum insured.

Two things can still change after a claim. Insurers are allowed to give discounts for good claims experience, so a claim-free discount can stop. And if you took your no-claim bonus as a premium discount, that discount may shrink after a claim. Both depend on your policy’s terms.

What is IRDAI’s 10% cap for senior citizens?

IRDAI’s circular of 30 January 2025 (IRDAI/HLT/CIR/MISC/27/1/2025) tells insurers not to raise premiums for senior citizens by more than 10% a year. It applies with immediate effect to indemnity-based individual health products for people aged 60 and above. An insurer that wants a bigger increase must first consult IRDAI. It must also consult IRDAI before withdrawing an individual product offered to senior citizens.

Example. A 66-year-old pays ₹50,000 a year. A revision that takes the premium above ₹55,000 at the next renewal needs prior consultation with IRDAI.

The circular is limited to indemnity-based individual products, so it doesn’t cover group or fixed-benefit policies. It also doesn’t say how a move into an older age band is treated. If your increase is above 10%, ask the insurer in writing for the break-up and how it complies with the circular. IRDAI rules also require insurers to run a separate channel for senior citizens’ claims and grievances, with details on their websites.

Is GST charged on health insurance premiums?

Not on individual policies, since 22 September 2025. The GST Council’s 56th meeting exempted all individual health insurance policies, including family floater and senior citizen policies. The rate had been 18%, and the change was notified in Notification No. 16/2025-Central Tax (Rate). Group policies, including employer group health cover, are still taxed at 18%.

If your last renewal was paid before 22 September 2025, compare base premiums, not totals. A ₹20,000 premium then cost ₹23,600 with 18% GST. A ₹22,000 premium now costs ₹22,000, so the total can fall even though the insurer’s price went up by 10%.

What is the grace period for health insurance renewal?

The grace period is 30 days after the due date for annual, half-yearly and quarterly premiums, and 15 days for monthly instalments. IRDAI’s 2024 Master Circular on health insurance says that if you renew within it, all your credits are protected: sum insured, no-claim bonus, waiting periods and the moratorium.

Being renewable isn’t the same as being covered. The rules require cover during the grace period only if you pay in instalments. For annual policies, it depends on your policy’s terms, so a hospitalisation that starts before you pay may not be covered. Miss the grace period and it counts as a break in policy, and you can lose your accrued credits.

How to reduce your health insurance premium at renewal

Every way of lowering the premium shifts some cost or risk back to you. Compare them on what you would pay in a bad year, not just on the saving.

Example. Suppose a ₹50,000 voluntary deductible cuts your premium by ₹6,000 a year (ask your insurer for the real figure). In a year with one claim, you pay up to ₹50,000 more. It takes about 8.3 claim-free years (₹50,000 ÷ ₹6,000) of savings to cover one such claim.

What to check in your renewal notice and policy

1. Renewal notice: the premium break-up, each member’s age, the sum insured, add-ons and any “discount” or “loading” line.
2. Tax line: for an individual policy renewed on or after 22 September 2025, there should be no GST.
3. Policy wording: search for “Renewal”, “Grace Period”, “Revision”, “Loading” and “Discount”, and check how and when the insurer must tell you about a premium revision.
4. Schedule: whether your no-claim bonus is shown as extra sum insured or as a premium discount.
5. For anyone 60 or over: the percentage increase from last year’s base premium.

Where people get caught out

• Missing the grace period. A lapse can cost years of waiting-period credit and bonus, which no premium saving makes up for.
• Assuming cover during the grace period. On an annual policy, pay before you need treatment.
• Cutting the sum insured to save money. Raising it again later can bring underwriting, and fresh waiting periods, on the increase.
• Applying the 10% rule to everyone. It covers individual indemnity policies for people 60 and over, not younger members or group cover.
• Switching on price alone. A cheaper policy with a room rent limit or co-pay can cost more at claim time.