Medical expenses is arguably the single biggest unexpected expense that can set your financial plans back. Unfortunately, it is difficult to predict medical emergencies. The best one can possibly do is be prepared and health insurance can play an important role in it.
Yet lot of us are uninsured or under insured. This can be due to variety of reasons – ranging from being extremely optimistic about one’s health in future to lack of awareness to lack of willingness to “waste” money on premiums! Some of us are just too lazy to do financial planning, including getting insured!
Why should you get insurance ASAP?
I’ll share some reasons, and hopefully make a case for you. In case you are undecided!
Here are 7 reasons why you should get a health insurance now!
- Health care costs are rising. This increase is typically much more than what inflation rate suggests.. A week’s hospitalization in India can easily cost upwards of a lac. (and run into several lacs in many cases) In many places (like USA) healthcare super-expensive and out of reach for several people.
- Premium is relatively lower when you get insured early. This increases with age. Premium you pay is typically a small fraction of potential cost of medical treatment which it covers. It is usually in 1-3% range of sum insured (but there can be lot of variability depending upon variety of factors!)
- Some pre-existing conditions may not be covered. As your age increases, your susceptibility to new medical conditions (e..g diabetes, hypertension) increase. This increases your health risk. Since premiums are directly proportional to health risks, your premiums can increase. In most of the cases, pre-existing health conditions (and possible consequences) are not covered under health insurance. This makes it really important to consider buying health insurance early in life! This may make this more usable when need be later on in life.
- Longevity of life and advances in health care – Thanks to advances in healthcare, an average human being is living longer than before. WE need to be really thankful for that. However, this longevity also means need for more medical interventions. And this leads to higher medical costs. All this requires money. Health insurance can help you handle these medical costs when needed.
- Modern day lifestyle – Unfortunately many of us live an unhealthy lifestyle. Consumption of junk food is extremely common. And so is consumption of alcohol and tobacco! Fast paced life adds to the stress which is again unhealthy. All this increases our susceptibility to health issues.
- Having company provided health insurance cover is good but not entirely reliable. In many cases, the coverage may not be enough. At the same time, company healthcare may not be forever. What if you are suddenly out of job? Or switch a job or start and the new company doesn’t offer health insurance?
- Tax benefit – You can claim tax benefit under Section 80D under Indian Income Tax rules.
More food for thought on health insurance
Imagine being hospitalized for few days and a bill of Rs. 5 Lac. If you are uninsured you may have to foot the entire bill yourself. However, If you have proper insurance, it is quite likely that a major chunk of it will be paid by the insurance company. There may be deductible or co-pay. But hopefully 90%+ or even entire amount will be paid. (depending upon the policy terms)
This health insurance cover may cost a small annual premium. In India, a cover of Rs. 10 Lac for a 30 year old may cost Rs. 10-12k. For a family of 4, this cover may cost Rs. 20k. Premiums depend upon lot of factors, but is typically in the range of 1-3% of sum insured.
On a personal note, I once got hospitalized for couple of days without any insurance cover (had just started up and conveniently delayed getting insured!). Luckily the bill wan’t too huge and was manageable! But what if there had been something that required huge expenses?
It may well happen that you live a long and healthy life, and may not actually need to use medical insurance (though you diligently renew it every year). If that is the case – it is a good problem to have!
You can compare different health insurance options in India here