Buying a policy with a high sum insured at a young age means you lock it in at a lower premium than buying the same policy at a later age.
The year 2020 was not like the others. It has been a year that has not only seen a small virus change the world we live in, but also changed our perceptions about the importance and need for health insurance. Until mid-March 2021, nearly 120 million people worldwide had been infected with the deadly coronavirus which has killed more than 2.6 million. In India alone, more than 11 million infections were reported in mid-March, just behind the United States.
What is shocking is that less than four percent of COVID-19 patients in India have health insurance coverage. And a majority of those with health coverage found their coverage inadequate. When the coronavirus was at its peak, the cost of a 15-day hospitalization in a super-specialized hospital in the national capital could have reached Rs 10 lakh per person. And with COVID-19 being a highly infectious virus, there have been thousands of cases where entire families have contracted the virus and therefore need expensive medical care, bringing collective expenses to tens of lakhs for the whole family.
Lower-cost insured health plans are no longer sufficient
With a common misconception in India that a family policy with an insured sum of 7-10 lakh is sufficient to meet a family’s medical needs, many have found themselves in a situation where they have had to deplete their lifetime savings on treatment, and even had to borrow money from family and friends to cover costs. However, it is not just a pandemic that could put him in such a situation. According to the Indian Council of Medical Research (ICMR), the number of cancer cases in India could increase to 1.5 million by 2025, up from 1.39 million in 2020. Not only that, cases of heart disease are also on the rise in the country and its prevalence, along with stroke, has increased by more than 50 percent over the past three decades. In addition, more and more cases of diabetes and hypertension are being reported every day, which increases the risk of developing chronic kidney disease.
While it is true that over the years the coverage and efficiency of health facilities is improving in the country, the cost of treatment is also increasing at a rapid rate. Thus, having a health insurance policy with the sum insured of Rs 5-10 lakh would not be enough to cover the most serious ailments. In fact, this amount may not cover the treatment of serious illnesses even today as they usually cost up to Rs 30-40 lakh in India. If you take into account medical inflation, which increases at twice the overall inflation rate, this cost is expected to double in 9 to 10 years. Given these odds, it makes sense to have a higher sum insured under your health insurance policy.
Rs 1 Crore Health Coverage – A Game Change
To address these concerns, there are Rs 1 crore insured health insurance plans in the market that provide comprehensive coverage to customers. While you might be wondering it would cost a bomb, it isn’t. These Rs 1 crore policies are designed as a combination of a basic plan coupled with a super top-up, which greatly reduces the premium of these policies. The people who buy health insurance plans with a higher sum insured have increased considerably. Previously, the share of people purchasing health insurance plans with Rs 20 lakh – Rs 1 cr sum insured was less than 5 percent. However, this share has now grown to 50 percent in the past 12 months. These policies are ideal for people with a family history of serious illnesses like heart disease, cancer, and diabetes. They cover not only hospitalization costs, but also pre and post-hospitalization costs, ambulance costs and organ donation costs. And all of this at a reasonable premium amount if you buy such a plan at an early age.
Buy early to save on the premium
Many young people feel in good shape and do not need such high coverage. But most of these policies only cost a slightly higher premium than policies with Rs 25-30 lakh coverage. By also buying a policy with a large sum insured at a young age, you lock it in at a lower premium than buying the same policy at a later age.
For example, Rs 1 crore health insurance can cost as low as Rs 10,680 per year if you buy it at age 25. However, if you take out the same policy at age 45, it could cost you almost Rs 17,000 per year. So, people should buy health insurance coverage for Rs 1 crore in their twenties and thirties, rather than waiting until they are in their forties and fifties. Especially now, when our lifestyles are becoming more and more sedentary, there is an increased risk of health problems in later age.
(Par Amit Chhabra, Head-Health Insurance, Policybazaar.com)
Do you know what it is? FE Knowledge Desk explains each of these and in more detail at Financial Express Explained. Also get live BSE / NSE stock quotes, latest mutual fund net asset value, top equity funds, top winners, top losers on Financial Express. Don’t forget to try our free income tax calculator.
Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest news and updates from Biz.
–
