Health Insurance- How much does one need?
Health Insurance :This is one of the most challenging questions all individuals seeking to buy health insurance are faced with. Not having enough insurance coverage could deprive the individual from some medical procedures due to paucity of funds, but at the same time a higher coverage would put a strain on the finances at the time of taking the policy.
Almost all Indians are grossly under-insured or un-insured, with just 11-13% of the population having insurance, including those covered under the Government sponsored schemes. Recent studies have thrown out a disturbing fact that up to 86% of Indians dip into their savings or end up borrowing to meet medical emergencies.
The above question needs to be looked at from different angles.
One of the other reasons quoted for either not purchasing health insurance at all or for the low cover is the cover extended by the employer. This is a huge mistake. The coverage bought by employers is invariably insufficient to cover medical exigencies. This cover also ends when one leaves / looses the job. There have been instances of medical emergencies arising while one is in-between jobs, which becomes a twilight zone by itself.
The medical needs of individuals are a factor of age and medical history. It gets difficult to obtain an insurance cover with increase in age. Most products have restrictions on “age at entry” and even stringent requirements for medical tests at the time of buying a policy.
Unfortunate as it may be, the savings in Income Tax applicable to Health insurance premiums has become the basis for deciding the amount of coverage being purchased. However, tax-benefits cannot be the sole factor to choose the extent of coverage. This will be one of the deciders as it factors the affordability angle because one should be able to pay the premium regularly through the years without a break.
Finally, it is not enough to think that the quantum of coverage is enough through the years as medical costs are increasing continuously and this also needs to be factored as the years progress in tune with inflation.
These days there are many portals and financial tools that assist individuals in taking decisions based upon age, family size and cost of treatment etc.