Anil Rego
Not having medical insurance is either a sign of wealth or foolhardiness. Paying a small price relative to the comfort of having a financial backing during medical emergencies is a non-negotiable essential insurance cover. Those who do not want or decide they do not need medical insurance either have liquid wealth that can pay for any medical treatment, no matter what it could cost, or actually expect to never fall ill.
For the normal person buying medical insurance is a sensible practice that has the added encouragement provided by the government in the form of a tax deduction for the premium paid U/s 80D.
Beyond recognising the need for medical insurance you can make the security and comfort provided by the cover go further than simply vanilla cover, doing a lot more than usual for the same investment. The term ‘investment’ is rightly used here as it is as essential for your health as an investment of time and effort in exercising and eating right for your health.
Do not cut corners. It is dangerous to your long term financial health to have insufficient insurance. Check your family history for illness or situations that repeat. Is there a history of cancer or cardiac problems in your family? Are kidney or liver conditions in your family more common than in the general population? What about your city – are there certain health problems that affect an above average percentile of the population? Buy additional cover to treat these ‘special situations’. Buy ‘riders’ to cover yourself from specific illnesses.
Be aware also of the cost of the treatment of medical conditions that would affect a normal person in standard conditions. The cost of medical care has exploded and this may only be partly controlled by the government action on the prices of some medicines, or devices such as cardiac stents. The impact on your finances of having less insurance than needed can be severe, though possibly not as devastating as not having medical insurance cover at all.
The office does not cover you enough. Medical insurance is often offered by corporate to their employees as a perk. The most common manner in buying this insurance is for the corporate to take a group insurance cover. There are limitations to this, as there may not be cover left for your need towards the end of the year if there have been several large claims during the year. Also, the insurance cover may be discontinued at any time, especially if the corporate feels a pressure on profitability and needs to cut costs. The insurance cover cannot be carried with you, and your new employer may not offer the perquisite. The cover seldom lasts into retirement and is offered only by the government and few corporate for employees who have the requisite years of service to qualify.
Medical insurance on retirement can be restricted by amount of coverage and be very expensive. It is wise to have an additional personal cover to take care of situations when there is no cover from the office.
Claims, however, during your employment are best made from the group cover offered by the office so that the no-claim bonus on your personal policy is not disturbed.
Enjoy the competition – break it up. The no-claim bonus is entirely lost on a claim, even if the claim is a fraction of the bonus. Divide your total insurance into two and buy from 2 different insurers. Make all your claims from only one insurer and let your no-claim bonus grow on the other. This option is not likely to last long as regulation may require you to disclose all your medical insurance and the claim be spread proportionately among them. But enjoy this option as long as it lasts.
Float it. If you have a family you need to cover every member. Instead of individual policies take a single ‘Family Floater’ for the cumulative needs. This way any costlier treatment for a family member could be covered. An individual policy may not be sufficient and the premium may also cost more than a combined cover.
Do it now. Waiting affects your premium which increases with age. Having an illness also hurts you in having to pay more premium for your cover and also not being able to claim on a pre-existing condition for a year or two in the terms of the policy.
Buy your insurance through a broker who will help you with the claim process. And never lie on your form – read it in detail so that you do not sign to untrue claims. The policy would be useless if it is discovered that relevant facts have been hidden or misrepresented in your policy application form.
The most important step is to step out – walk or jog, visit a gym, stay fit. The insurance policy is your best friend when it is not used.
The writer is CEO and Founder, Right Horizons
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