How much health Insurance is required?

The need for medical insurance increases with age. Disease may affect persons of any age may be a child, grown ups, young man or a old man. Accidents and injuries can effect anyone. However the amount needed for medical expenses may vary depending upon the type of disease.

 

It is very difficult to say that in case of a child the medical expenses will be low and in case of an elderly man the expenses will be high due to age related problems. Though in case of elderly persons the chances of incurring medical expenses are more.

But no one can predict in what age the disease may struck. Now a days we see many young healthy persons suffer heart attack, cerebral hemorrhage and many such diseases which were not known before. Comparatively the age expectancy has increased a lot. In 1940′-50’s the average life expectancy of a person was considered to be 40 years. Now the life expectancy is at around 60-65 years.

Insurance is required for both Living too long or dying too soon. If a person lives long chances of contracting diseases increase and as a result the cost of living longer increases. Since in old age the person usually retires from work the burden of sharing his expenses comes on either the pension he receives or his children on whom he is dependant. If the children are not financially strong the burden of meeting medical expenses may upset their budget.

The amount of insurance that needs to be taken exactly depends upon the current earning capacity of the person and the amount he can afford towards health insurance without disturbing his routine expenses.

Health Insurance is must for all, i.e. Individual and his spouse, Children, and Dependant parents.

If a person covers all family members in a single policy he can get group discount which will help him to save insurance premium. A person can also opt for a Floater policy under which all his family members will be covered under a single sum insured. For example say if a person opts for a floater policy of Rs.250000. Now under this policy the sum insured for all the family members will be Rs.2.5 lacs. In case of hospitalization of single member also he can avail treatment upto 2.5 lacs. However after availing the amount the sum insured will be reduced by the amount of claims paid under the policy.

So every individual must set out a budget which he can afford to forego every year and must take health insurance accordingly. However he must ensure that the amount of policy is enough to cover most medical expenses. In any case there should not be underinsurance. Having underinsurance is like not having an insurance.

Suppose you are very hungry and you go to a restaurant. You order for 5 chapattis. However you have to satisfy with only one chappati as you don’t have enough money in your wallet. Even though you had one chappati your hunger is not satisfied. You don’t feel good as your want has remained unsatisfied. So your position before you had one chappati and after having chapatti remains the same. Rather after having one chapatti you have become more unsatisfied.

Similar is the case in insurance. Under Insurance is a strict NO…NO…. Now say a major operation costs Rs. 250000. But you have purchased a policy for only Rs. 50,000. This will not serve the purpose for having health insurance as you will have to arrange the balance amount for the treatment from your own pocket. The hospital will ask you to first arrange the money then only the treatment will be started. So ultimately you don’t get the advantage of having a health insurance.

In case of health insurance the amount of premium paid is not refunded if a person does not suffer from any disease during the year. I know a person who used to get sad at the time of end of the policy that he has wasted all the premium and he has not suffered from any disease. So indirectly if he would have suffered any disease he would have been happy that his insurance premiums has been utilized.

I definitely think you don’t agree with this person and you will certainly feel happy that you have not suffered any disease. That gentleman did not calculate that had he suffered from any disease he would have been hospitalized and may have been off from work for 15 days or more. This would certainly have affected his earnings and business.

What is the ideal amount for health insurance? Ideally we see that an amount of around 150000 – 250000 on an average depending on capacity of the person would be adequate. However if the amount is more and the person can afford it nothing like it.

This will again depend upon the earning capacity and financial position of each individual. You should consider medical premium expenses as maintenance cost of living a healthy life. Don’t treat it as a wasteful expenditure.

Having multiple covers from Insurance company advisable?
Even if you have multiple covers you will get only the actual claim amount. Multiple cover means having a policy from more than one insurance company. Suppose you take one policy from X insurance co. for Rs. 2 lakhs and Y insurance Company for Rs. 1.5 lakhs. You suffer from disease and the amount of claim is Rs.75000. You will get a claim only for Rs. 75000. You will not get a separate claim from each of them. However if you have a claim of Rs. 230000 then only the two companies will proportionally share the claim amount. But that will be a cumbersome affair as you need to submit original document to the insurance company for getting a claim. You can submit the original papers to one company only.

So instead of purchasing health insurance from two separate companies take bigger amount from one insurance company.

For more such articles read Heath Insurance in India A Review authored by Dr Rakesh Agarwal