Human life can be unpredictable at times. It is always associated with the factor of uncertainty. This element can bring a good or bad change. Any good change leads to happiness but if it happens to put forth a bad change, life gets affected to a great extent. There may be several reasons for such changes in life. Predominant among them is ‘health’.
There is no doubt that a healthy life leads to a happy and cheerful life. A person in good health can enjoy every bit of his/ her life. It relieves any kind of mental stress allowing him/ her to plan for future. With a relaxed mind people can concentrate on the priorities of life. Hence in this way a healthy person can lead a better life.
Unlike this an unhealthy individual will live occupied with the thoughts of healthcare. Any sickness can affect the health of the person to a great extent. Unless the ailment is cured the person cannot live stress free. Not only does it affect the physical state of the person but also the mental state. In addition to health worries, today the healthcare is a big challenge. The high medical care cost keeps a majority of people devoid of quality healthcare. The expensive treatment cost goes beyond the budget range of many people. Hence people end up compromising with the quality or else borrow or sell off their precious articles in order to meet the expenses. In such cases people face high level risk in terms of health.
Taking care of one’s health is something which is important but there is a need to understand that health insurance is a must for everyone. People wonder why medical insurance is required in life. They don’t understand its significance until they happen to face a health crisis. But by then it becomes too late to recuperate the costs. So it is better to take appropriate measures rather than regretting later.
First, let’s take a look at the basic meaning of health insurance. In a layman’s term, it’s a paid service provided to a person to make sure he is covered monetarily in case he has the need to get medical attention due to disease, accidents, etc. With the rising incidence of diseases and cost of treatment, any illness can mean substantial financial outgo for you and your family. Health insurance allows you to plan for such events without feeling the financial burden of treatment.
The general conception about health insurance is that it is relevant to unhealthy people or only to aged ones. There are others who take their health for granted. For such reasons people prefer not to buy a health cover. Unlike this, the truth remains that medical insurance is a relevant product for us all. One needs health insurance at every stage of life, more so when you are older. The best time to take it is when you are young, fit and healthy. Once you have a family, it’s best to have all members of the family covered, even if your children are very young and healthy. It is a tool that makes the healthcare journey comfortable. In addition it gives a sense of security, relieving the insured from the tension of health uncertainties and the related needs. Moreover, it also allows tax saving since the premium that you pay on your health insurance policy is eligible for tax deduction under Section 80 D of the Income Tax Act. (Up to Rs.15,000 for an individual or Rs.20,000 for senior citizen of over 65 years of age).
Some people believe that if they are covered by their employer, they don’t need to buy a separate policy. This can be a costly mistake. While such covers are useful, they may not be sufficient. If you lose your job or switch to another company, you may be rendered uninsured. For supplementing an existing cover, you can either buy a normal policy or a top up plan. A top-up policy is cheaper because it will cover expenses beyond a certain initial threshold. For instance, Sharma, his wife and child already have a Rs 2 lakh health cover from their employers. They should ideally supplement this cover with a top-up policy. If they buy a normal cover of Rs 5 lakh, their premium will be at least Rs 10,000 per year. However, if they buy a top-up cover of Rs 5 lakh with a Rs 2 lakh deductible, it will cost them only Rs 4,100 a year, a saving of Rs 5,900 per year. Their existing policies can take care of the initial Rs 2 lakh, which won’t be covered by the top-up plan.
Health insurance is especially important for people not in formal employment. For them, a simple indemnity plan that covers hospitalisation expenses will not be enough. They also need to insure themselves against loss of income due to hospitalisation.
Most salaried people get paid medical leave, but if your company does not offer this benefit, a fixed benefit plan comes to the rescue. Self-employed professionals should supplement the base cover with a fixed benefit policy, which pays them a certain amount for the period that they are out of action.
Health insurance is the only tool that can provide the financial support to deal with the expenses incurred during healthcare. However, there is not much you can do to shield yourself from the rising cost of insurance. However, you can control costs by making smart choices. Some financial planners suggest that besides health insurance, you should also set aside a corpus for medical emergencies. This option may not always be feasible, but an increasing number of people are opting for it. Their reasoning: if there is an emergency and your policy can’t cover the full expense, you have something handy to ensure the best healthcare available. “If you don’t suffer from any health problem, the money still stays with you,”
Blog is written by Sonia Ambwani, CFPCM, CFA (ICFAI), Program Manager- Financial Planning at International College of Financial Planning
