How much health insurance one should buy?

Health Insurance

Health Insurance in India has come a long way since 1986 and it is one of the fastest growing segments in the non-life Insurance Sector.

Increasing disposable incomes, more awareness about health has lead to a sea- change in the people’s attitude towards health-care.

This coupled with the advancements in health-care industry has pushed the health-care costs compelling people to look for health insurance. Today health insurance has become a necessity next only to food, clothing and shelter.

The health insurance portfolio of the non-life insurance industry is growing at an accelerated pace and occupies second position in terms of the premium turnover. The portfolio is expected to touch Rs50000 crs by 2020.

Sensing the importance of this portfolio the Indian insurance Regulator IRDAI has issued separate guidelines / Regulations for the conduct of Health Insurance Business.

One important question in every persons mind who wants to take a Health Insurance policy is, what is the Right / necessary amount of coverage one should have?

There is no single answer for this question.One-size fits all will not apply here. The amount of health insurance required should be driven by each individual’s need and affordability.

Having said this we can provide a broad guideline which a person can follow to decide on the amount of health insurance he/she needs.

Understanding and assessing ones need:

1.    Who is to be covered – Coverage for self, family including parents? – In case of family coverage one can opt for floater basis.

2.    Present Health condition of the family members intended to be covered

3.    Family history of any disease or illness. If the family history is positive for any major disease then a Critical illness rider can be thought of.

4.    City in which he resides. Because, cost of health care will vary from city to city.

5.    Any coverage provided by employer/ government? If yes then personal purchase of health insurance can be in excess of this amount.

6.    Affordability, i.e., the amount he can spare towards Health Insurance premium.

7.    Dependence on other family members

Market exploration:

Next step would be to check the market as to the products offered by different companies.  Price comparison and comparison of exclusions and coverage should be made.

Though this can be self-instructed approach there are web-sites that provide such information. Help can also be taken from the intermediaries.

Combining both aspects mentioned above one can reasonably arrive at the type of coverage as well as the amount of coverage:

1.    A person living in metro city wanting to cover the entire family including parents can opt for a family floater cover with a fairly reasonable sum insured, say Rs10lacs, provided the premium is affordable.

It is not a wise proposition for such a person to go a low sum insured say Rs2lacs as the very purpose of taking health insurance is defeated he and his family would not be protected fully. Remember scant protection is just as bad as no protection at all.

2.    Where there is cover provided by his /her employer then the person can opt for a “top-up” product which will provide higher protection at reasonable cost.

The above broad points can assist a prospective buyer to choose the type of health insurance and the quantum as well.

Having decided on the type of policy and the amount of insurance the next step would be apply for insurance.

The application form (also called as the Proposal Form) for health insurance is an important document and care needs to be taken to fill this truly and completely. Questions relating to existing problems should be answered truthfully.

If facts are not fully revealed or information provided is wrong then it can go against the policyholder – when in need the health insurance policy may not stand by you!

After crossing the first stage of taking a health insurance policy it is very important to stay connected – by enhancing the amount of insurance at renewal.

Many purchasers of health insurance fault here- the sum insured is very rarely revisited. Unless this is done one runs the risk of not being adequately protected.

Curated from How much health insurance one should buy?

You may also like...