JOIN USAn increasing number of Indian households have perceived financial planning as an integral part of their personal finance management. Preparing for unforeseen circumstances that may wipe out a large chunk of your savings is an important part of this process. There is an increased awareness about the escalating healthcare costs and how expensive medical procedures and medicines have become among public. But this does not make an average middle-class Indian well prepared to face this sort of financial crisis.
This is quite evident from the low penetration level of health insurance in India. When medical inflation is 15% every year only one in every five Indians has health insurance. Mostly, the healthcare expenses are borne out-of-pocket. Even those having health insurance are unable to fully manage the cost of healthcare as they are severely under insured. So how does one know exactly how much health insurance should suffice for him or family?
There is no one-size-fits-all approach to buying health insurance. There are a large number of health insurance providers in India, offering a plethora of distinguishable products, which means the options available are many and varied. It is therefore necessary to assess your own requirement and buy a policy that suits you best.
The most important factor in deciding your health insurance cover is your ability to spend on premium. You need to look for a policy that will offer adequate cover with affordable premium. Do not postpone buying a policy because you are facing a cash crunch but instead buy at least a policy with a smaller sum insured initially. You always have an option to increase the coverage amount later when your affordability improves.
Buy insurance when you are young and able-bodied. The chances of you having any serious medical issues are lesser and the premium payable each month will be low. Review how much you spend on hospitalisations and medical bills in the past three years. By a rule of thumb your medical cover should ideally be 50% of your income + 100% of the last three years’ hospital bills. Factor into what kind of hospital you would generally prefer to be treated in, this will change the amount of health cover required.
If you are looking to cover your spouse, your children or your parents, you can opt for a family floater. It works under the presumption that not all members of the family will require medical attention at the same time, and anyone in the family can avail the benefit. A family floater is cheaper than buying individual policies for all members of the family, and hence is more cost-effective.
A large portion of people rely on their employers for health insurance, but more often than not, employee insurance plans don’t offer comprehensive cover. In case you assess that your existing individual health insurance policy will not suffice, you can opt for a top-up plan that will provide additional coverage. This is cheaper than buying a new policy or even upgrading your existing one; the premium payable will also be lower.
It is also important to look at other smaller factors while choosing your health insurance policy. Choosing a cashless policy over a reimbursement type of policy may be beneficial so that you don’t have to shell out huge amount of money in order to avail treatment before your health insurer intervenes.
Check whether your insurance cover costs of hospitalisation, what the room rent cap is, if the ambulance, doctors and nurses and medication costs are included or not.
No policy will pay for everything; there is certain out-of-pocket expenditure while availing treatment. Check how long before your insurance policy kicks in and how much you will be paying in deductibles. You need to know if you can avail services only in the insurer’s affiliate hospital network, or can avail care from any hospital and be reimbursed.
Having a health insurance policy gives you peace of mind that no unpredictable circumstance will severely impact your financial security. Price and coverage may be the top most priorities while buying insurance, but looking at the fine print and all the aspects of the policy are necessary to make sure you are making an informed choice.
(The writer is CMD at Star Health and Allied Insurance)