How Much Health Insurance Cover Should You Have?
In the Union General Budget for 2015-16 the deduction limit for health insurance premium under section 80(D) has been hiked from Rs.15000 to Rs.25000 in general and for senior citizens from Rs.20000 to Rs. 30000 per year. It is good news for tax payers as they can now get tax exemption for higher amount that they compel to spend on their health insurance cover.
Medical expenses are gone up in recent years. Especially in India, medical inflation was running higher than the salary hike in the recent past. Studies shows that India has the highest medical inflation in the world and that is really alarming! This reality make more people to buy health insurance for them and family and a considerable increase in health insurance premium in recent years due to rising medical inflation rate in India has not deterred these people from buying their health insurance policy. It is true that people need to shell out more money now towards their health insurance premium than before and the earlier limit offered under section 80 (D) is not even half of the premium paid by many families for their cover. This could be one of the reasons to rise the limit up to Rs. 30000.
This is a good move indeed and it will definitely attract more people towards paying higher premium for coverage they actually require. To attract customers, health insurance companies has also come up with some unique features that include premium variants and add-on benefits as optional. These services include reimbursement of vaccination expenses, maternity cover, exemption from earlier sub limits and an option to book high end rooms in leading private hospitals. Though these features can be of very useful to many, not everyone need to opt for it for the simple reason that all of us may not use these added benefits every time.
Policy buyers need to be cautious while buying these type of feature rich policies. They need to analyze their health insurance requirements and then make a careful choice rather than buying policies without a second thought. When you buy these feature rich policy, you are actually buying a product that offer many features which you may not require at this stage, instead focus on the main factor – the ideal cover for you and family.
What are the things that you need to consider when you buy a Health Insurance Policy?
As we know, requirements of each individual and family varies. The type of health insurance cover suitable for a family is depend on some of the main factors listed below:
- Health history of family member : If you want to include your parents or aged members to be included in the policy cover, then prepare to shell out some extra premium. Health history of parents can impact the insurance premium as well especially when parents has a medical history of diseases like cancer, heart attack or stroke etc. Usually, policy will be issued for children of such parents after a medical check up in the beginning. Extra premium will be loaded based on the medical test results and age of the customer. Check on the facilities offered with feature-rich health insurance policy and make a choice carefully. Choose only those features that are useful to you and family.
- Life style and preferred hospitals of family members: Life style of policy buyers can have an impact in their health condition which in turn affect their health insurance requirements. Consult with a health insurance specialist and make an appropriate choice of feature that are useful to you or other family members.
- Premium affordability and the ability to bear the extra expenses in case of sub limits: When you buy a policy with all its features on, its premium rate would be definitely high. It is very important to see that what you can afford. Prioritize your requirements and make a decision accordingly. Make a choice for sub limit options carefully and consider your liability towards it.
- Place of residence: Medical expenses vary different hospitals located in different cities and towns. Especially in larger metros, if one particular treatment is very expensive there then it is appropriate to go for featured policy so that you get medical coverage from the day one.
- Nowadays, all major health insurance companies have included a coverage restore feature in their existing health insurance policies. This added feature would restore the entire health insurance coverage utilized in that year. This feature is found to be useful when you have aged parents included in your Family health insurance policy. However, this add-on may not find much importance in case only young people are included in the policy cover.
How much health insurance is required for a family?
This depends entirely on factors like age, location, number of members included, family health history and affordability. In case of a young family that consist of a wife, husband and two kids then start with a coverage 3 lakh or 5 lakh. If you are living in a smaller town, then 3 lakh coverage would be fine but in case you live in any of metro cities then go for 5 lakh.
Analyze your requirements for the comings years. It would be ideal to increase family cover once in every 5 years irrespective of whether you have used your coverage in the past or not. 40% increase in coverage in every 5 years is recommended in metro cities. This is just an indicative figure. The actual enhancement required for your health insurance coverage is also depend on your past claim history and present health conditions of you and family members. Increasing medical inflation that we witness in each year and a need for higher health insurance coverage due to age increase of family members are the basic reasons for seeking enhancement for anybody’s health insurance coverage.
The best thing that you can do is to evaluate defined benefits and top up plans to enhance protection in such a way that the top up cover would get activated only after your base cover is exhausted.
The other option is to go extra coverage for critical illnesses like Cancer, Stroke or any other heart ailments. This top up coverage provide financial assistance over and above basic hospitalization expenses. This option will protect policy holders from financial distress due to illness and loss of income. You can either go for a Critical illness top with your existing health insurance policy or you can buy a fresh Critical Insurance policy from any Life Insurance or General Insurance company.
Under this policy, the affected person is entitled to get a lump sum amount (sum insured) irrespective of the actual medial expenses, after he/she diagnosed with any of the critical illness included in the policy. This product is really worth to consider especially when you seek coverage for your parents.
Always do your homework before making a choice. Include your health insurance expert in the decision making process. Never buy an idea of taking a policy with maximum cover instead get a cover that you and family require.
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