Warning of the third wave of coronavirus from health experts has prompted people to get health insurance coverage. with advanced medical science, sophisticated care is available for various diseases. The treatment costs of COVID-19 are also covered by health insurance. Other than the pandemic, lifestyle diseases such as diabetes, cardiovascular diseases are becoming more prevalent among the urban population, hence covered by health plans. What more? Medical inflation is higher than general inflation at about 15%. Everyone from newborns to senior citizens is more prone to hospitalization these days than they were a few years ago.
All these make an adequate health insurance policy the need of the hour. Having health cover is the starting point for any financial plan.
How Much Cover You Need in Health Insurance
How much cover for individuals? – If you are an individual searching for a health insurance plan for your early phase of life, choosing a health insurance cover for above 3 lakh is the right option. This will allow you to avail much-needed coverage to deal with expenses due to illness if any. Since you are young, your chances of falling ill and registering a claim are very low. It means you are highly probable to enjoy the cumulative bonus or no claim bonus, thereby your sum insured will increase year on year up to 200% depending on the insurer you have chosen.
How much cover for a family? – With 15% medical inflation annually health cost has been rising steadily. So, not being covered under a comprehensive health insurance plan can be a risk for your health irrespective of your age. You will not be sure when an ailment will strike, leaving you with huge medical bills. If you are not prepared to handle such a situation, a single case of hospitalization will very affect your budget. Amid such instances, buying a health plan is of utmost importance to cover you and your family against any emergency medical condition.
Well! Having medical coverage is good. However, it is the basic requirement. It is quite necessary to have an adequate mix of coverage. Many policyholders in India provide coverage to their families for around 7 to 9 lakh and the average as the common sum insured is shared by a single family. For 2 adults and 2 children, opt for at least a sum insured of 10 lakh.
How much cover for senior citizens or parents? – While deciding on the level of coverage, you must be pragmatic. In this day and age, even a small routine surgical procedure can normally cost you up to Rs 1 lakh. The cost of bypass surgery at a reputable hospital can range between Rs 2 lakh to Rs 2.5 lakh. And the medical cost will certainly cost more in the next 5 years. A sum insured that is sufficient today may not be adequate for covering your healthcare expenses in the coming years. It is therefore important to consider the inflation factor before deciding on the Sum Insured. If your parents are senior citizens i.e. 60 years old or more than that, you should opt for health insurance with a higher sum insured.
What is the right amount of coverage to consider?
There are many factors to determine the right amount of coverage. These factors are:
- The type of hospital you prefer
- Current age
- Health conditions of yourself and your family members
- Your affordability etc.
- Your location
Costs of healthcare vary to a large extent due to the hospital and facilities opted. To take an example, the expenses incurred on a knee replacement surgery may double if you you choose an imported implant rather than an indigenous one. So, your health insurance size should be well associated with your lifestyle and income.
While it is difficult to estimate the exact sum insured amount for an individual health insurance plan, you need to understand two market-broadly-accepted rules on its quantum.
- Your health insurance should be a minimum of 50% of your annual income.
- The cover should be the least cover the cost of a coronary artery bypass graft in a reputable hospital.
Most personal finance professionals recommend individuals to go for a minimum health cover of Rs 5 lakh. And you can have a similar sum insured for a family floater plan.
Please note that the increasing medicine and treatment costs may offer your individual health insurance policy inadequate to cover all expenses. Basic health insurance may not provide coverage for expenses related to the recovery phase, such as counseling, extensive nursing care sessions, rehabilitation. However, you can considerably improve the health cover of your basic plan by opting for Riders or Top-Ups without an increase in the premium.
Riders- Rider is an add-on designed to offer additional benefits. Some riders available with health insurance are hospitalized, but only after exhaustion of a threshold limit, called a deductible. Insurance companies do not cover deductible amounts.
Deductible Clause & Top-up Plans – It makes the Top-up plans reasonable as the smaller claims do not need to be paid to the insurance company. In case of high severity of the disease, the treatment cost of which may go up to Rs 5 lakh or more, you should opt for a Top-up cover.
The estimation of how much health insurance you need is not easy. However, keep in mind a few important things that will help you make an informed decision in choosing the sum insured.
- Always disclose true facts about existing diseases
- Failing to disclose your health conditions may lead to claim rejection.