We were recently speaking to someone who had suffered an accident in the family, and was narrating to us his experience with hospital expenses and insurance cover. In this case the individual was adequately covered and the experience turned out to be a positive one, although the overall expense that was incurred brought the need of adequate health insurance into focus!
The problem with Health Insurance is that it has been somewhat limited by the tax benefits offered.
Most people settle for a cover of 100,000 to 300,000 and a small proportion for Rs 500,000-750,000. The value of how much to spend on health insurance is seen from the perspective of the maximum allowable limit for tax exemption and affordability.
The argument “for” health insurance is a simple one. The cost of healthcare is rising and no one can foretell what illness or accident may befall them. The fact is that a major illness or accident requiring hospital care can significantly deplete a person’s finances. Costs for the treatment of an illness requiring prolonged hospitalization can be sometimes be more than Rs 10,00,000 in a top hospital.
Due care should be given to planning for health insurance cover. In addition to personal circumstances, income, and pre existing or family history, the key factor to consider is the potential health care costs that one should insure against. This will depend largely on the location and type of hospital in which care may be provided – the cost of care varies hugely between a government hospital, a private nursing home and one of the larger “Category A” hospitals.
Private Health Insurance is important for anyone who does not have a “guaranteed” health cover, such as provided to government or armed forces employees. Employer provided Group Health Insurance is subject to continued employment and the terms of the group cover – which may or may not be renewed in the future, or may not be provided post retirement. The fact is that more people need healthcare post retirement than they do during their working years!
The amount of cover should be adequate from a medium to long term perspective. Remember, it becomes more expensive to cover for health insurance with age. More importantly, buying health insurance for pre-existing diseases can increase costs significantly or may result in pre-existing diseases not being covered at all.
Different health insurance policies have different rules for underwriting, covering pre-existing diseases, exclusions, and eligibility for certain types of charges covered or room type / room cost per day. It is important that in taking a health insurance cover, proper research and comparison is done on the various products in order to decide which ones meet your requirements best. This is not only a function of price.
Some plans will also offer hospital cash benefits to cover ‘other’ expenses when hospitalized or out-patient or dental expenses.
One can consider either an Individual Plan or a Family Floater which provides for cover for the family. A Family Floater can be cheaper than a combination of Individual plans, but limits the payments covered to the overall sum insured in a given year.