How much Health Insurance do you Require ?

Advancement in medical sciences have lifted the life expectancy significantly in the last few decades. However, changing lifestyle and external factors have resulted in individuals especially in urban areas living longer, but less healthier today. Instances of accidents are on rise as a consequence of growing number of vehicles and there has been significant rise in the medical disorders due to new-age lifestyle known as lifestyle disorder. Everyone from newborn children to elderly senior citizens is more vulnerable to hospitalization today than they were a few years ago.

Meanwhile, with medical inflation estimated at 15% per annum, the cost of healthcare has been rising steadily since last one decade or so. With rising healthcare costs, not having a Health Insurance irrespective of an individual’s age can be risky. You can never be sure when an illness will strike, leaving you with huge medical bills. If not prepared, a single instance of hospitalization can very well disturb a family’s well-calculated budget. Amid such possibilities, having a Health Insurance policy is of utmost importance to cover you and your family against any emergency medical situation.

Well, having a Health Insurance policy is good, but it is the basic requirement. It is equally important to have an optimal mix of coverage to have to get the most out of a Health Insurance policy. Most policyholders in India cover themselves for around Rs 2-3 lakh and the average individual coverage under individual Health Insurance policies is even lower.

You must be realistic while deciding on the level of coverage. Today, even a small routine surgical procedure can easily cost up to Rs 100,000. A bypass surgery at a reputed hospital in excess of Rs 2 lakh today, and will certainly cost more in the next five years. A Sum Insured that appears sufficient today may be inadequate to cover your healthcare expenses in the next few years. So, it is advised to factor in the inflation before deciding on the Sum Insured.

So, is there any “right” amount when considering Health Insurance online? The right amount of coverage depends on several factors like the type of hospital you prefer, current age and health conditions of yourself and your family members, your affordability etc. Healthcare costs vary significantly by hospital and the facilities opted. For example, the cost of a knee replacement surgery nearly doubles if you opt for an imported implant instead of an indigenous one. This way, the size of your Health Insurance should be linked to your income and lifestyle.

While there is no ideal sum assured for Health Insurance policy for an individual, there are two market-broadly-accepted rules on its quantum.

First, your health cover should be at least 50% of your annual income. And second, the insurance cover should at least cover the cost of a coronary artery bypass graft in a hospital of your choice. Most personal finance experts recommend a minimum health cover of Rs 5 lakh. You can have similar sum assured as a family floater to include your family members.

The rising costs of medicines and treatments may render your individual Health Insurance cover inadequate to cover all expenses. The basic Health Insurance policy may not cover expenses related to recovery phase such as extensive nursing care, counselling sessions, rehabilitation. But you can substantially enhance your health cover – over and above your basic policy – with tools like Riders and Top-Ups without corresponding increase in the premium.

A Rider is an add-on that gives you additional benefits. Some of the riders commonly available with Health Insurance policies are hospitalization, but only after exhaustion of a threshold limit known as deductible. Deductibles are not covered by the insurance company and have to be paid by the insured. The deductible clause makes the Top-Up plans inexpensive because the smaller claims do not need to be paid by the insurer. When the severity of the illness is high (like a heart problem), which can push your basic treatment cost to Rs 5 lakh or more, you need a Top-up cover.

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