Health insurance: Does it create wealth for you
‘It is health that is real wealth and not pieces of gold and silver’, said Mahatma Gandhi
Whichever way you look at it, there is nothing but truth in this statement. Philosophically, if you are not in good health, then despite having wealth one is not able to enjoy it. If you consider the financial perspective, then being unhealthy will slowly corrode your wealth by way of medical treatments and expenses. So you need to protect your wealth from your health!
Prevention is the best cure for this. Take a balanced diet, exercise regularly, don’t take stress, be happy and sleep well.
Another way to protect your wealth is to have insurance. One, through benefit policies (like critical illness cover) and second, through medical insurance plans. Both are not competing products, so it is not a case of ‘either or’. Before opting for one, the other or both, you need to take into account various factors like the sum assured, your age, condition of your health, work environment amongst other factors.
A critical illness cover pays a predetermined fixed sum to the policyholder on diagnosis of an illness from a prescribed list of illnesses like cancer, bypass, kidney failure etc. While in case of a regular health plan or a mediclaim as it is popularly known, the actual expenses incurred during the hospitalisation are reimbursed to the policyholder.
An illness like cancer, a heart ailment or renal failure not only results in heavy medical expenses on account of hospitalisation but also inability to work partime or fulltime as you need time to recover and recuperate from a surgery or prolonged treatment. So you may have to go for ‘loss of pay’ or reduced pay for a few months before you can resume work normally. The critical illness cover whether taken as a rider to a life insurance plan or a standalone policy gives you a sum assured on diagnosis of one of a prescribed set of illnesses like bypass, stroke, kidney failure, cancer etc. This amount helps you to make up for loss of income or reduced income during the recuperation period.
Under such benefit plans that cover critical illnesses, the contract comes to an end once the lump-sum is paid out. So once you have used the said sum assured you are left vulnerable if there is a medical emergency in the future. Further, even if you wish to apply for a new policy, you may not be able to apply for any since many insurance companies may refuse to cover the illness or bring it under the mandatory 2 –4 year waiting period.
So as important as it is to buy critical illness cover, it should be a supplementary to a basic health policy.
You could buy a basic health policy and enhance the total health cover by taking a fixed benefit policy or critical illness plan, where a certain amount is paid on diagnosis and not after hospitalisation and this amount therefore can be used to replace income lost during the period of illness. It is not tied to your illness, which gives you the freedom to spend it the way you choose.
There is a whole plethora of health products now available in India and you need to filter, select and purchase the right combination of health plans that would be appropriate for you. This would help ensure that your health insurance cover is comprehensive.