The Dark Secret Behind Dirt Cheap Health Plans Sold by Paytm and PhonePe Revealed!

Health insurance plans are a crucial component of one&39;s financial planning, as they provide financial protection against unforeseen medical emergencies. However, traditional health insurance plans can be quite costly, making them unaffordable for many. In recent years, mobile apps like Paytm and PhonePe have ventured into the health insurance market, offering plans at significantly lower premiums.

But have you ever wondered what makes these plans so cheap? Is it because these companies are not-for-profit or because they are passing on some unknown benefits to their customers? The answer lies in the way they structure these plans. Health insurance plans offered by banks or mobile apps are often cheaper because they are typically group plans for account holders and KYC-approve app users.

When a large number of people come together to purchase insurance, the risk pool increases, allowing insurers to spread the risk and offer lower premiums. This is known as the &39;group effect&39;, which enables insurers to reduce their operational costs and pass on the benefits to their customers.

In the case of Paytm and PhonePe, these companies have an existing user base of millions of customers. When they offer health insurance plans to their customers, they are essentially creating a large group of policyholders. This enables them to negotiate better rates with insurance companies, resulting in lower premiums for their customers.

Another factor contributing to the lower premiums is the reduced distribution cost. Traditional health insurance plans often involve agents and brokers, who charge commissions for selling these plans. In contrast, Paytm and PhonePe sell their insurance plans directly to their customers, eliminating the need for intermediaries and reducing the overall cost.

Furthermore, the eligibility criteria for these plans are often less stringent, as they are primarily designed for account holders and KYC-approve app users. This reduces the underwriting risks associated with these plans, enabling insurers to offer lower premiums.

It&39;s worth noting that while these plans may be cheaper, they may not always offer the same level of coverage as traditional health insurance plans. Policyholders should carefully review the terms and conditions of these plans before purchasing, to ensure they meet their specific needs.

In conclusion, the cheap health plans sold by Paytm and PhonePe are a result of the group effect and reduced distribution costs. While these plans can be an attractive option for many, it&39;s essential to carefully evaluate their coverage and terms before making a purchase.