April and May are the months when most salaried professionals get their performance bonuses and pay hikes. Any financial planner that one may consult after this will most probably advise you to buy tax saving instruments like equity-linked savings schemes (ELSS) and public provident fund schemes. Health insurance, one of the most critical products, is rarely ever on this list.
Estimates suggest that health inflation is at 18 percent since 2017 and could go up to 23 percent by 2021 in India. The boom in the medical tourism industry will only make healthcare more expensive as those from developed markets with fatter wallets are ready to play for quality services.
In India, almost 70 percent of the health expenses are borne ‘out of pocket’ rather than having insurance cover costs. With both the waiting period (the 6-12 months period after buying a policy where insurance claims are not payable) and policy exclusions coming down, it is a win-win for the consumers. Buying a policy at the age of 23-25 years is ideal, since not only are the premiums cheaper, it also helps in maintaining a better fitness early on since insurers incentivise such behaviour.
One may argue that they could always save money in bank accounts for emergency expenses. But considering house rent and other monthly expenses, saving up a decent sum like Rs 10-15 lakh for medical purposes would take several years. On the other hand, at an annual premium of Rs 15,000-20,000, an individual (non-smoker at the age of 25) could buy a Rs 10 lakh health cover.
As per insurance regulations, health policies have lifelong renewability. This means that even if one’s health deteriorates after a few years of buying the policy, the insurer has to mandatorily renew the product each year.
Unfortunately, a lot of individuals realise the need to buy health insurance after reaching their mid-40s. At this stage, there is a high probability of being denied the cover if you have one or more health-related conditions like blood pressure or diabetes. Further, the premiums go up by 40-45 percent compared to what it would have been for a 25-year-old. Family history for heart ailments and cancer increase the chances of being denied a cover.
Many professionals also make the mistake of solely relying on the group medical covers offered by employers. Not only is the cover size is inadequate in most cases, but the number of exclusions is also higher. A large majority of these products also involve a co-pay clause wherein the insured has to bear a certain cost of the medical cover.
Lifestyle-related diseases like lung cancer, ulcers, high cholesterol and diabetes are becoming increasingly common in India. The wise decision now would be to tap the opportunity and buy a health insurance cover at the earliest. Because when you need a health cover the most in the years closer to retirement, you are least likely to get it. – Moneycontrol