How to enhance coverage affordability via insurance premium financing? MintGenie explains
The penetration in India is extremely low compared to other developed countries. IRDAI data showed that India’s insurance penetration was 4.2% of the GDP in 2021-22. While the data has been positive in the last few years, there is still a long way to go.
The data indicates that many people don’t have insurance coverage. One innovative solution to help people get adequate insurance coverage is insurance premium financing.
Premium financing involves using loans to cover the cost of insurance premiums. This helps to pay premiums over a more extended period instead of paying in one go.
“Several insurance companies have forged partnerships with premium financers to offer this service to their policyholders. At BimaPay, we follow a similar approach by collaborating with insurance companies, making it convenient for policyholders to opt for insurance premium financing during their onboarding experience," said Hanut Mehta, Co-Founder and CEO, BimaPay.
Insurance premium financing is a process where a borrower secures a loan from a third-party provider to cover the insurance policy’s premiums. This arrangement is similar to standard loans, where the borrower (the insured person) makes the interest payment till the loan is fully paid off.
This financing option will be helpful, especially for paying health insurance premiums, as healthcare expenses are growing faster.
Insurance premium financing offers several benefits, which can be explained in simple terms as follows:
Makes insurance more affordable: Paying the entire premium at once can be challenging for many people. Premium financing allows people to distribute their insurance premium payments over time, reducing their financial burden. This makes insurance affordable for
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