Health Insurance

When comes to managing and planning about one’s finances, protecting it is more handy tool than accumulating. Our plan circles around some big picture but we somehow deliberately ignore the subject of insuring our health. Its big time that we talk about health insurance. Our life is exposed to various uncertainties even we cast aside the topic ‘death’. Health insurance comes into picture when we need to handle those situations.

Some years back my uncle had fallen sick and hospitalized and eventually diagnosed with cancer and aunt exhausted all the money and investments they had and they didn’t have any insurance to fight the situation back then. We usually don’t hesitate to spend when choices narrows down to money and life of someone we care about. Health insurance is important when it comes to hospitalization, doctor visit, lab test, critical illness or even family’s health including parents and when you are travelling. It can cover individual, family or some group. It also make the quality treatment within your affordability and gives some tax benefit and obviously some peace of mind.

There are many types of health insurance offered by public companies, private companies and some are government sponsored. While so many insurance available in the market, choosing the best for you is a little tricky. You can choose for yourself or your Financial Planner can help you. You need to consider your existing health plan or plan provided by your employer and what more risk you are assuming. You may jolt down the points like size of your family, parents, number of family members you wish to cover for critical illness. When you are done assessing on the personal level you will need to assess the different plans offered by different companies. In doing so you need to assess the special features, medical network, number of hospitalization days and daily cash limits, services covered, cost of premium, pre and post hospitalization cover, incurred claim ratio etc. ‘Incurred claim ratio’ is a measure of how much company is paying (net) out of the net premium collected e.g. if the ratio is 85% and company had collected premium of Rs.100 then profit is Rs.15 and Rs.85 is spending as giving the claims. Usually if the ratio is high then good for the policyholder. When choosing plans some terms may sound confusing like ‘deductibles’, ‘riders’ etc. Deductibles is the amount you are responsible to pay every year before your insurance company pay anything whereas riders refers some additional benefits you can add to your basic plan for a little cost. Some popular riders in India are maternity cover rider, hospital cash rider, critical illness cover rider personal accident rider etc. Companies decide their premium based on types of policy, members are covered, age, critical illness and pre-existing diseases covered, deductibles, scope of cover etc. Family floater policies (cover each family member under one policy) and high deductible policies are often cheaper.

Whenever you or your family members get hospitalized or go for a health checkup you will have to contact your insurance company and the company will pay for it. Although you can claim your insurance money either cashless where your insurance company pay your medical bill direct to the hospital or through reimbursement where you pay the bill because the hospital does not comes under the network of the company and then claim from your insurance company. In either way you have to fill the claim form and submit along with the hospital bills. When protecting your family you can also enjoy some tax benefit on the premium paid every year. The Section 80D of Income Tax Act allows you to claim deduction of practically fifty five thousand rupees every year whether you are resident or non-resident of India under the act. The below table can be of some help to understand the tax treatment.

Well it is prominent that an optimal health insurance plan serves as the basic and one of the important feature for an effective and goal oriented financial plan. But while protecting ourselves we should also remain careful from the mis-selling of health policies by the agents driven by their achievement of sales target and high commission. Mis-selling of health policies has emerged as a big challenge before the insurance companies and regulating authorities. In order to solve the issue, it has become a responsibility for the insurance companies to focus more towards consumer welfare and make the consumer aware about the various features of policies. However it is our responsibility to analyse and evaluate carefully the policy before opting for the same. Hence as a responsible individual it is our duty to gift our loved ones a healthy and financially secured future as Mahatma Gandhi has also said that “It is health that is real wealth and not pieces of gold and silver”.