Health insurance basics


Health is not valued till sickness comes – Thomas Fuller

Are you prepared for the various uncertainties and challenges that life could throw at you?
Have you planned to financially protect you and your family against the huge hospital bills you will incur when you meet with an accident or diagnosed with an illness? Of course, let’s hope that nothing of that sort happens, but the big question is, “what if?”
You have a term life insurance policy, which pays the family when the policyholder passes away. Isn’t that sufficient?
Does your insurance policy pay a monthly income when you cannot work due to disability?
Do you want to protect your hard-earned money and not drain it away due to unprotected health?
There is only one answer to all these questions – Health Insurance.
What is health insurance?
Simply put, a health insurance policy is a plan which pays a predetermined amount when you are sick or disabled or hospitalised due to the same.
If a person is retrenched, there is always another job waiting for him. However, if he is disabled, he might never be able to return to work. And the more painful fact is that being saddled with a disability would require much more money than death. In death, there is no income and no expenses. In disability, there is no income but a lot of expenses. He will not only be crippled physically but also financially and as a consequence, mentally also. If he does not have a suitable insurance plan in place, his life savings would be drastically reduced in no time.
Having a lot of insurance or paying a lot of premiums does not necessarily mean that you have the right insurance or you will get financial assistance when you need it the most. How do we ensure this?
A comprehensive insurance plan should, in addition to the basic life insurance, include health insurance with the following components-
· Hospital expenses – reimburses the hospital bills when you are hospitalised.
· Hospital income – pays fixed daily cash benefit for each day you are in hospital resulting from accident or illness.
· Accident – pays a lump sum when you meet with an accident.
· Critical illness – pays a lump sum when you are diagnosed with one of the 30 critical illnesses as stipulated in the policy.
· Disability income – pays a monthly income regularly to replace the income you would lose if you were not able to work as a result of an accident or illness.
· Long-term care – pays a fixed amount monthly to cover expenses for long-term nursing care, in the event that you are not able to perform daily activities such as feeding, bathing and moving around.
In addition to life insurance, buying health insurance is an essential component of our insurance planning. After all, the chances of a person falling sick or meeting with an accident are much more than the person dying, isn’t it?
I know what your next question would be.
What is the cost of all these plans?
In my practice as a financial planner, I have encountered questions such as “How do I take up so many policies? I do not have enough money to pay for the premiums.” In general, the health policies are not expensive since they do not acquire any cash value. Also, most of these plans are available as riders. Riders are low-premium policies which could be attached to main policy (life, savings or investment).
You might be thinking that insurance provided by the employer is more than sufficient to meet your insurance needs.This is not true for the following reasons:
1.  The group insurance plans have lesser benefits and lower limits.
2.  You cannot choose the sum assured or type of room to be admitted into. Your employer does it for you or it may be pegged to your salary or your position in the organisation.
3.  The employer can reduce or terminate the benefits at any point of time.
4.  When you decide to change your job, insurance should be your last concern.
5.   You will have no insurance when you retire, the period when you may need it the most.
Most of the employers provide benefits up to a maximum of 2-3 months if you become disabled. What if the disability persists after 3 months? No job, no income and no insurance.It is a proven fact that when people are emotionally down, they tend to fall sick. So just imagine adding “ill-health” to the above – that would be disastrous.
One point to be noted while taking up a hospital insurance plan is that when you are hospitalised, there is a specific payment to be made by you and the insurance company pays the rest. The amount would be specified by the insurance company, depending on room charges and other such factors. Some of the insurers offer a separate plan to cover these payments also.
The second point to be noted is that you should take a plan according to the type of hospital and room type you would want to be admitted in and inform about this to your family members.
Do a careful planning according to your priorities and even if you are not able to take a comprehensive plan at one go, you can do it step by step. You can do it yourself by reviewing all your existing policies or you can obtain the help of a good financial planner.
What are your views on health insurance? Did you have any experience that made you happy or regret your decision to take insurance? Please feel free to share in the comments section:

1 thought on “Health insurance basics”

  1. Pingback: The art of caregiving – part I – Go healthy ever after

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