The penetration of health insurance in India is bare minimum. And that is a surprise, given that on an annualised basis, medical costs have, in the recent, past risen by almost 20%, which is the highest rate of growth for any form of expense.
Many of us are also not covered for out-patient expenses; if you budget your medical expenses, you will find that out-patient expenses can constitutes around 75% of the total medical expenses.
The right medical cover
In the act of choosing the right medical cover, one should understand that there are a few expenses that will be covered by default by most of the medical insurers.
What one should really be searching for is if there is any extra mileage in a particular product or two. Check if your medical cover includes expenses for room, boarding expenses as provided by the hospital/ nursing home, nursing expenses, surgeon, anesthetist, medical practitioner, consultants, specialist fees, operation theatre charges, surgical appliance, medical and drugs, chemotherapy, radiotherapy and similar expenses.
In case of health insurance, one should not always opt for the cheapest quote. While choosing a medical cover, try and go for one that offers long-term cover, well into post-retirement years. There are a few insurers, such as Apollo Munich, Star Health and Max Bupa, who offer policies with health insurance cover for life.
All insurers have different plans available and one should ideally choose the one that suits one?s needs best. While planning for family, one should avail a family floater, which will be cost-efficient.
In this, the health cover is availed cumulatively on the family members, more like an umbrella cover. Typically, there are no individual limits and any number of claims can be made during a year. It makes sense to avail health cover earlier in life as age definitely affects health insurance plans in terms of coverage as well as cost. The older you are, the costlier your health insurance premiums become.
Tax benefit
Insurance premium payable on health insurance policy is tax deductible under Section 80 (D) of the Income Tax Act 1961 as R15,000 can be claimed to be deducted on health insurance under Section 80 (D) and a further R15,000 can be claimed for parents. This limit increases to R20,000 in case any of the dependent parents being senior citizens. The total amount that one can claim for deduction under Sec 80(D) is R35,000.
For claiming tax deduction, the premium payment has to be done either by cheque or credit card. Cash premium payment does not qualify for tax deduction.
Add-on benefits
Normally, pre-existing diseases are covered after a brief two-year waiting period. There are other benefits, such as bonus for no-claim years. This could enable one to increase the sum assured substantially over the years. There are other features available selectively, such as out-patient coverage, investment and insurance plan, etc.
To ensure that you are not caught off-guard with critical illnesses during distressed situations like job losses and transition, one should be adequately covered.
At least for such times (and for retirement years), it is important to have a medical cover in addition to the one provided by the employer.
Plan for you healthcare adequately so that your finances do not suffer during times of poor health, and a well-planned health insurance could go a long way in making your financial plans more secure.
The writer is CEO and founder of Right Horizons
