Does Your Credit Score Affect Health Insurance in India?

Are you aware that the No-Claim Bonus (NCB) can increase your sum insured without increasing the premium? Yes, and not only that, many modern health insurance policies cover preventive healthcare like routine check-ups, wellness programs, vaccinations, and even yoga or fitness memberships under wellness benefit plans.

If you are exploring health insurance plans to stay protected against medical emergencies, explore health insurance plans by Bajaj General Insurance. Also, if you are not aware of the connection between your credit score and health insurance premiums, read on to get to the basics.

What is a  Credit Score and What Are the Factors That Determine It?

Individuals have financial obligations; they may need to repay a loan to the bank or pay back the credit card company for the amount they have used to make a purchase. If you manage your money well and repay these institutions on time, it shows your responsible financial behaviour. As a result, you are given a score from 300 to 900, with 300 being the lowest and 900 being the highest. This score is calculated by credit bureaus and is called the credit score or CIBIL.

Example: If you pay your credit card bills and loan EMIs on time, your credit score will be high, but if you miss payments, it will drop, and you may be considered a risky candidate when applying for further credit.

Do you know your credit score depends on what factors? Well, payment history is only one aspect of a credit score. It also depends on the following factors:

• Amount that you owe: It is also called credit utilisation, which means the ratio of your total debt to total available credit. If this ratio is high, it implies you have used a large percentage of your available credit and can lower your score.
• Length of credit history: If you have been managing debt responsibly for a long period of time, it shows a good track record and elevates your score.
• Having a diverse credit mix: Credit can be secured like home loan or unsecured like a credit card. Having a mix of both these types is a good indicator that you can manage your debt well.
• Applying for new credit: If you want to avail of a loan and apply for it, it can lead to a hard inquiry on your credit report. But if you apply multiple times in a short period, it can lower your score.

Also Read: Reasons Why Health Insurance Premiums Change With Increasing Age

How Are Credit Scores Used in Indian Health Insurance?

When you decide to purchase a health insurance policy, some insurers may ask for your permission to check your credit score using PAN. If you have a good credit score, it shows that you can manage money well. You are a low-risk customer for the insurance company as it implies you will pay the insurance premiums on time. The insurer may provide you a discount on the insurance premium as a way of rewarding responsible financial behaviour.

But, if you are unable to manage your debts, insurance companies may charge a higher premium, called loading, because you are viewed as a high risk customer. They may also provide stricter terms and a smaller number of benefits.

Can Unpaid Premiums Hurt Your Credit Score?

If you constantly pay your insurance premium on time, it may not increase your credit score but yes, if you miss paying your premiums repeatedly, it can affect your credit score. This is because when you do not pay, the insurer sends your case to a recovery agency, and the unpaid amount can be reported to the credit bureaus.

What If You Commit Insurance Fraud?

If you are involved in insurance fraud, it may cost you dearly because the insurance regulator, IRDAI, has proposed linking insurance fraud to credit scores. This means if you are caught lying in a claim or involved in a fake hospitalisation case, it could be added to your credit report. It would make it difficult to get loans or insurance policies in the future.

How to Take Advantage of a Good Credit Score to Secure the Best Health Insurance Policy?

A good credit score opens up an array of benefits for policyholders:

• Avail of discounts on premiums: Many health insurance providers provide discounts on premiums for policyholders with a good credit rating. You can avail of discounts on your health insurance premium if you have a high credit score.
• Choose a plan carefully: Even though discounts are attractive, do not be tempted to pick a plan only for the credit-based offer. Go through the policy wordings carefully and check if it covers hospital rent, daycare procedures, pre and post hospitalisation expenses, etc., because a comprehensive policy will provide you with complete protection in case of medical emergencies.
• Discounts during renewals: Some plans also offer you discounts when you renew the policy based on your credit score, which means you can save a huge amount year after year just by maintaining a healthy credit score.
• Avoiding lengthy procedures: A good credit score will save you from the trouble of submitting extra income proofs or going through a lengthy verification process. Insurers trust you will pay the insurance premium on time by looking at your credit score and provide approval quickly.

Also Read: Newborn Baby Health Insurance for Expecting Mothers

Conclusion

As a responsible individual, you must maintain a good credit score to increase your chances of obtaining favourable credit and insurance terms. Bajaj General Insurance provides comprehensive health insurance policies with benefits like a large network of hospitals, wide sum insured options tailored for your needs, top up health insurance plans, and a quick process to settle claims. Buy health insurance online today and get complete peace of mind so that you can grow confidently without thinking about the what-ifs in life.

FAQs

1. Does my credit score directly affect my health insurance premium in India?

Some insurers consider your credit score as an indicator of financial responsibility and provide lower premiums or better policy terms if you have a good score.

2. What is considered a good credit score for getting health insurance easily?

A credit score above 750 is considered good. It shows that you manage your finances responsibly.

3. Can I buy health insurance if my credit score is low?

Yes, you can buy health insurance even with a low credit score. However, you may have to pay a higher premium or face stricter policy terms until you improve your score.

4. Will health insurance premium payments improve my credit score?

Paying your health insurance premiums on time doesn’t directly boost your credit score. But missed or unpaid premiums may negatively affect your credit history.

5. Can insurance fraud impact my credit score?

Yes. As per proposed IRDAI regulations, cases of insurance fraud could be linked to credit scores.

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***Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.