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Capital Trade

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  • Indiabulls
  • Aegon Life
  • LIC Housing Finance
  • DHFL
Dec 15, 2017 09:22 AM IST | Source: Moneycontrol.com

When and why should you buy health insurance?

The earlier and younger you buy a health insurance, the lower you pay for it.

Mahavir Chopra

The right time to buy a health insurance is ‘yesterday’.

Over the years, I’ve heard almost every excuse out there that people use to delay their health insurance purchase – “I’ve never been hospitalized in my life”, “Main kabhi bimaar nahi padta”, “I’m too young to buy insurance”, etc.

The problem with these arguments is, they think of insurance as a 70 percent voucher for their medical bills. They want guaranteed benefits and feel that if a claim is not made the money paid as the premium is wasted. Keep in mind that at the current rates of hospitalisation even if you get hospitalised once in five years, your entire premium amount for the past five years would be lesser than your hospital bill.

Insurance is at the end of the day, a game of probability and statistics. Where all it takes is one hit to turn the odds against you. Answer this -

What if tomorrow you or any member of your family falls ill? Are you financially strong enough to meet the medical expenses out of your pocket? And if you hesitate to answer these questions, you would realise that you must buy health insurance immediately.

Relevance of health insurance

If you have ever visited the hospital, you must have heard someone or the other say – “He was in great health last week when I met him. All of a sudden, don’t know what happened!”

That’s how most cases of illness and accidents are – they come out of nowhere. Consider this common scenario in cities with heavy rainfall -

Mr. A, a healthy male in his early 30s kept postponing buying a health insurance for the past 3 years. He got drenched on a rainy day, caught a high fever and was hospitalized immediately. He was diagnosed with typhoid, viral fever and leptospirosis — all three deadly diseases at the same time. He conquered them all and came home after a 15-day stay in the hospital. As a parting gift, the hospital handed him a bill of Rs. 2.5 lakh. Unfortunately, he did not have health insurance and had to pay the bills from his own pocket. Just imagine the magnitude of damage to his savings. If he had a health insurance, the entire bill would have been paid by the insurer and there would be no impact on his savings.

Health insurance protects you from the burden of such sudden and unexpected medical expenses which make a major dent in your savings. Remember, medical emergencies never come with a prior warning. Today, the cost of healthcare is very high and is bound to go higher as time goes by. The only best solution to manage it is by taking a comprehensive health insurance.

Start early: Early bird gets the worm!

The earlier and younger you buy a health insurance, the lower you pay for it. A health insurance bought at a younger age offers a greater and wider coverage against the one bought at an older age. It is not only the age that grows when you get older, along with it grows the health issues and so will your premium besides the list of pre-existing conditions. This will defeat the whole purpose of buying a health insurance.

Did you know a 31 year old male pays just Rs. 6,065 for a comprehensive health insurance cover of Rs. 5 Lakh against Rs. 8,129 paid by a 41-year-old?

Most health insurance companies have an age limit for buying the plan, which means you have limited options after retirement. Start early and you can outlive waiting periods on day care treatments, specific diseases and pre-existing illnesses.

Try and understand that at the end of the day, Insurance is a business and not charity. Insurance companies want that fewer claims come their way. So, they have cheaper rates for people who are young and healthy.

If you try to buy a health insurance when your chances of using it are high, it’ll cost you a lot more too. It’s always better to buy a good cover early in your life and then continue with it.

Employee health insurance: Valid till you are employed with your organization

You might argue, “I am already covered by health insurance provided by my organization, why should I buy a separate one?” The answer is simple, health insurance from your employer is effective for the time span of your employment with the organization. Once you leave the organization due to a potential job change, job loss or retirement you would be left with nothing. The new employer might not be offering this benefit at all, or what if you incur a huge medical bill in the period between your resignation and joining the new office. Neither of the insurers will accept your claim under such conditions.

A personal health insurance would save you from liquidating your savings or assets or even worst borrowing to meet any medical contingencies.

Tax benefit: Protect and save at the same time

Buying a health insurance also makes you eligible for claiming tax relief under section 80 D of the Income Tax Act, 1961. The premiums you pay for health insurance for yourself, spouse and children get you a deduction of up to Rs. 25,000. If you are also paying towards the health insurance of your parents, you get an additional deduction of Rs. 25,000 and if your parents are senior citizens it increases to Rs. 30,000 i.e. a total of Rs. 55,000.

Thus, protecting yourself financially from unforeseen medical expenses should be the driving force behind buying a personal health insurance policy. Whereas, tax saving is the icing on the cake that makes your correct decision sweeter.

The world that we live in today is full of uncertainties, and hence a basic individual health insurance or family floater health insurance plan is highly recommended. Get the maximum cover you can afford, check the range of benefits along with the list of network hospitals in your locality.

Remember nobody wants their family panicking and running around arranging for money to pay off medical bills. So, no matter how good your health is, “Now” is the time to buy a health insurance policy for yourself. There is a popular saying about health insurance:

"Buy health insurance when you don't want it, because you may not get it when you need it."

(The author is the Director – Health, Life & Strategic Initiatives - Coverfox.com)

tags #insurance

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