Myth Busted: A Lower Premium Doesn’t Always Mean Lower Coverage

Posted on: Jun 6, 2025 | 3 mins | Written by: HDFC ERGO Team

Myth Busted: A Lower Premium Doesn’t Always Mean Lower Coverage

When it comes to health insurance, there’s a popular belief that paying a lower premium means you’re getting less coverage. After all, if you're paying less each, the coverage must be less, right? In real life, a reduced premium doesn't always mean you're losing valuable benefits. The real worth of health insurance is in recognising the combination of the cost and available coverage.

Breaking Down Health Insurance Costs

Health insurance is not just about the premium. Incidentally, premiums are only one of several variables that determine your overall cost and level of health coverage. Let us now discuss the elements of a health insurance plan so you can better appreciate how they affect your coverage.

• Premiums:

A lower premium might seem like a great deal, but it’s just a small piece of the puzzle. Even though it reduces your short-term monthly cost, there are other elements to take into account such as how it interfaces with your co-pays and deductible.

• Deductibles:

The lower premium plans usually come with a higher deductible. So, though you might be paying less up front, you'll pay more when you use medical services. And, if you expect to require frequent medical services, the higher deductible could become a burden.

• Co-pays and co-insurance:

Co-pays are fixed amounts you pay for medical services, such as a doctor’s visit or prescription. Co-insurance is the percentage of the cost you pay after the deductibles are met. Lower-premium plans typically have higher co-pays or co-insurance rates, which can lead to higher out-of-pocket costs over time.

• Out-of-pocket maximums:

Lower-premium plans often come with a higher out-of-pocket maximum, which could leave you paying a significant amount if you face a major health event. You should make sure the out-of-pocket costs under the plan make sense in line with your healthcare needs.

Connection Between Premiums and Other Costs

While a lower premium might save you money, it could mean you'll end up paying more when you need healthcare services. On the other hand, plans with higher premiums often offer lower deductibles and co-pays, providing better financial protection in case of illness or injury.

• High-deductible plans:

These are plans with lower premiums but higher deductibles. They’re often a good choice for healthy individuals who don’t expect to need much medical care. If you're generally healthy and don’t anticipate large medical bills, a high-deductible plan may be a cost-effective option. However, if something unexpected happens, the higher deductible can become a financial challenge.

• Low-deductible plans:

These plans typically have higher premiums but lower out-of-pocket costs when you need care. If you have ongoing medical needs or expect to visit doctors frequently, a plan with a lower deductible could be a better choice in the long run.

Network Coverage and Benefits

Health insurance plans come with networks of doctors, hospitals, and clinics that you can visit without paying additional fees. Lower-premium plans often have more restrictive networks, meaning fewer choices when it comes to doctors and hospitals.

Higher-premium plans are likely to have a more extensive network of medical professionals, giving you greater freedom in selecting doctors and specialists. Furthermore, these plans might include additional features like improved preventive care coverage, wellness programmes, or access to telemedicine services. While these added benefits can be attractive, they also contribute to the higher premium.

Preventive Care and Wellness Programmes

A common misconception is that health insurance is only useful when you need emergency treatment or expensive procedures. Most health insurance policies include preventive care and wellness benefits that work to keep you healthy and prevent expensive treatments later on. These could include coverage for regular check-ups, screenings, vaccines, and even fitness or weight loss programmes.

• Wellness Programmes:

Some plans offer access to programmes that help you stay healthy, such as gym memberships or online fitness classes.

• Preventive services:

Health insurance plans often cover the costs of preventive care, such as annual physical exams, cholesterol checks, and vaccinations. This type of coverage ensures that you diagnose potential health concerns early before they become more expensive conditions.

Conclusion

A lower premium doesn’t always mean lower coverage. While premiums certainly play a role in how much you pay for your health insurance, other components such as deductibles, co-pays, co-insurance, network coverage, and added benefits can all affect the value of a plan. By knowing these aspects, you can make a better choice and pick a plan that best meets your healthcare needs and budget.

When you're looking to buy health insurance online, it's a good idea to weigh your premium against other costs, such as out-of-pocket expenses, network availability, and preventive care coverage. This will help you determine if you're getting the coverage you need while maintaining your financial health.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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