Do health insurers allow reducing the base sum insured to lower premiums?

My parents also have a super top-up plan offering ₹50 lakh coverage with a ₹10 lakh deductible. I am considering reducing the base SI to ₹6 lakh, since with the cumulative bonus, the total cover would still be ₹11 lakh ( ₹6 lakh + ₹5 lakh). The reason for this change is the rising premium. Is this the right approach?

–Name withheld on request

You have a good product construct: A base SI of ₹10 lakh and a super top-up of ₹50 lakh with a ₹10 lakh deductible. This provides cumulative coverage of ₹60 lakh. However, the cumulative bonus should not be treated at par with the base SI when planning the insurance construct.

There are two main reasons for this. First, if you reduce the base SI, your eligibility for the maximum bonus will also decrease. Most plans cap the bonus accumulation at a percentage of the base SI, typically 50%. So, reducing the base SI also reduces the maximum bonus you can accumulate. Second, the bonus is subject to reduction in case of a claim.

Plans treat bonuses differently. Some reduce the bonus if there is a claim in a given year. In such cases, your bonus will decline just when you start utilizing the policy. Moreover, the premium discount from reducing the base SI from ₹10 lakh to ₹5 lakh may not be substantial.

I had opted for a ₹50 lakh base SI in my family floater plan a couple of years ago. Now, I feel that a lower base SI along with a super top-up plan would be a better and cheaper option. I want to reduce my sum insured by half. I checked with my insurer, but it is not allowing this. What should I do?

–Name withheld on request

If you want to reduce the sum insured in your base plan, you could consider porting the policy to another insurer. This would allow you to transfer all accumulated waiting periods to the new policy, where the insurer may be more willing to offer a lower sum insured. You could also consider migrating to a different plan with the same insurer.