The awareness of health issues is possibly at an all-time high though action on the part of consumers lags behind. Only a fortunate few have insurance. Some others can afford the ever-increasing costs of extended hospitalisation, tests, surgeries, etcetera. But for many others, borrowing from friends and relatives is the only way to ensure that care for themselves or their families in not compromised in the time of need.
Today, healthcare expenditure, not just in India, but around the world, is highly inflationary. Further, it is not negotiable, or something that one wishes to compromise on. Therefore, it is absolutely necessary to ensure that one is adequately prepared to meet medical needs. Over the past decade, there has been an increasing incidence of lifestyle diseases coupled with rising medical costs. Even though the awareness of health issues is high, there is evidence of not enough saving for medical emergencies. According to a survey by NSSO, 40% of the people hospitalised have either had to borrow money or sell assets to cover their medical expenses. The number of such people is rising at 16% per annum.
Worldwide, health insurance is regarded as the most cost-effective route to tackle healthcare expenses. An ideal health insurance solution offers comprehensive cover for all medical expenses incurred by an individual, be it day-to-day medical expenses (which include regular medicines and routine check-up costs), hospitalisation and surgery expenses or expenses to treat critical illnesses. While there are many kinds of health insurance, a growing set of consumers in India is opting for plans that ensure a fixed sum of money for a specific illness, thereby allowing them to optimise their healthcare spends as per their needs. In addition, individuals can pay a minimum amount of premium and buy a health insurance product that not only covers him/her but provides a cover for the entire family.
The treatment for cancer or organ transplants costs anywhere between Rs 5-10 lakhs. The total cost not only includes medical and hospital expenses but also the incidental expenses like travelling, lodging and temporary loss of income for an individual recuperating from the illness. In fact, incidental cost contributes to at least 35% of the total treatment. Therefore, it is necessary for an individual to buy a health plan so that a health emergency does not derail any other goals.
However, before selecting a health plan, an individual should take into consideration the different kinds of medical expenses he may incur and the various kinds of health insurance plans available. Further, there can be broadly three types of medical expenses; day-to-day medical expenses—which include regular medicines and routine check-up costs. They generally do not impact an individual’s budget significantly; hospitalisation and surgery expenses—which comprise treatment of minor ailments; and expenses on the treatment of critical illnesses—these include treatment costs, incidental costs and loss of income.
A health insurance plan should cover the widest possible range of medical procedures for the longest possible term. It should also cover the policy holder against all the possible health care expenses. While there is no such thing as a standard coverage, one should opt for plans which offer long-term coverage. The customer should take into consideration his own lifestyle needs, with respect to the kind of hospital and the type of room he would prefer, while deciding the sum assured for a policy. Further a policy should entail upfront underwriting to ensure what one is covered for and what is not.
Finally, under Section 80D one gets tax benefits by investing in health insurance plans. An individual can save tax up to Rs 5099 (valid for an annual income above 10 lakhs) over and above what is covered under Section 80C.
Although it is no substitute for a healthy lifestyle, a health insurance policy can help you reduce the financial burden incurred during a medical exigency and enable you to concentrate on your recovery rather than on how your medical expenses will be met.
(The author is head, Health Business & Corporate Strategy, ICICI Prudential Life Insurance... )
