Importance of Health Insurance
A lot of individuals tend to overlook health insurance. This leads to several problems in life. Here are some of the biggest reasons why health insurance is so important:
- Savings on healthcare costs
- Wide and comprehensive coverage
- Tax benefits
- No claim bonus (NCB)
- Family floater policies
- Hedge against medical inflation
- Overall improvement in wealth
Understanding the importance of health insurance will help you get a clearer sense of your insurance needs and choose the best health insurance plan for yourself. Before we dive into each of the pointers, let’s try and understand what is health insurance.
Health insurance serves as financial protection against treatment expenses in case of unfortunate events like medical and accidental emergencies.
As rightly said in common folklore, “Health is Wealth”, it is important to follow a healthy lifestyle with great diet and proactive physical activities.
However, a lot of times even the healthiest of individuals can need medical assistance for a variety of reasons. To make sure situations like these do not break your bank, it is important to insure your health and your loved ones’ too.
10 Factors to Consider When Buying Health Insurance
When you are looking to buy health insurance, due diligence is very important. Here are some pointers that you should remember while buying a health insurance policy:
|Wide Coverage||Sum Insured|
|Extended Renewal||Cashless Hospitalization|
|Network of Hospitals||Maternity Care|
|Pre/Post Hospitalization Expenses||Out-of-pocket Expenses|
|Lifetime Renewal||Perks & Benefits|
Why Health insurance?
With rising medical inflation and advancements in diagnostic technology, the cost of treatment has become extremely prohibitive. In these trying times, it is crucial to be financially stable to get the best and the most viable medical treatment. Even a short visit to the hospital can exert huge pressure on your finances.
Here are a few critical points to help you understand the importance of health insurance:
- Saves on Healthcare costs
Whether it’s our annual physical, emergency care, surgical, prescription drug, or even sometimes your dental expenses, medical services get pretty expensive at times. It is better to realize the importance of health insurance before getting your financial health affected because of towering medical bills. Health insurance pays a portion of your bill as per the policy terms.
- Wide and comprehensive coverage
Apart from covering in-patient expenses, health insurance also covers pre-hospitalization and post-hospitalization expenses as per the terms and conditions of the insurance policy agreement. These generally include expenses related to doctor’s visits, x-rays, medical reports, etc. Most health insurance plans also cover transportation expenses with a limit on cover for ambulance expenses. Therefore, the insured will be stress-free. The best health insurance plans also provide coverage for daycare expenses and domiciliary hospitalization expenses.
- Tax benefits
The amount of premium paid for the health insurance policy is available as a deduction under section 80D of the Income-tax Act, 1961. The maximum amount of deduction differs as per the provisions of the Act, at applicable law in force. It needs to be remembered that the individual does not get this tax benefit in the case of group plans provided by their employers. Hence, understanding the importance of insurance not only provides a robust financial protection, but also offers various tax benefits along the way.
- No claim bonus (NCB)
Health insurance is not only cost-effective but also increases your coverage in a no-claim year. In simple terms, if there is a year in which you don’t claim for any coverage, then there will be an increase in the sum assured amount or reduction in the cost of the premium for the next year. Basically, the insurance company rewards you for being more careful in the entire year and filing no claims in a particular year.
- Family floater policies
Choosing a plan for the entire family under the same policy head can ensure that every member can avail the best medical treatment. In the event of any medical exigency afflicting any member of your family, you will not have to worry about the financial costs. Such policies are also cost-effective with comprehensive health insurance coverage for the entire family. Getting an idea of towering healthcare costs and how it can effect your family financially is enough to help you understand the importance of health insurance for your family.
6. Hedge against medical inflation
With every passing year, the cost of medical expenses is also increasing exponentially. In fact, medical inflation is much higher than the normal headline CPI inflation. Managing health care expenses during the post-retirement period becomes difficult, especially for critical illness or long-term care which you might encounter during old age. So, having insurance can take care of these expenses. You can also save money for post-retirement goals such as travelling, building houses etc.
7. Overall improvement in health
It helps you stay healthy. Regular checkups, immunization, tests and screenings are necessary to prevent illness at a later stage. Well, the good news is that all health insurances now provide certain preventive services at no or minimal cost to you. Such screenings and tests are eye-openers and categorically question the habits affecting their health. You can take preventive measures and improve your overall health as well.
These are just some of the compelling reasons to buy health insurance for yourself and your family. We hope that these benefits of buying health insurance will help you understand the importance of health insurance better.
Earlier the better
Opting for health insurance early in life has numerous advantages, especially opting for it at an early age. At a young age, you are fitter, healthier and less vulnerable to diseases. Therefore, the cost of insurance at a young age is much lower, and the benefits will continue even as you grow older.
Besides, you will be offered more comprehensive coverage alternatives. Most schemes have a pre-existing waiting period which eliminates coverage of pre-existing ailments. This period will end while you are still young and healthy, therefore giving you the benefit of all-out coverage that will prove helpful if you fall sick later in life. Also your NCB can accumulate and culminate in a higher cover when you start early.
Clearly, buying health insurance at a young age allows you to get more benefits from the health insurance Here are some of the additional benefits of buying health insurance early:
- Low Premium: In most health insurance plans the amount of premium depends on your current age. Hence, buying a health insurance at a young age allows you to have a great medical coverage at low premiums.
- Better Financial Planning: It is very important to realize the importance of health insurance at a young age because it allows you to plan and manage your finances better. With adequate medical coverage to take care of any health emergencies, you can focus on investing in other long-term financial instruments.
- Greater Duration: Most health insurance products come with a ceiling on upper age. This means that you won’t be able to enjoy the benefits of health insurance if you buy it later in your life. When you understand the importance of insurance at a young age and buy a health insurance policy, you get to enjoy the benefits of the plan for a greater duration without worrying about age limits.
- Lifelong renewal: You can avail the benefit of lifelong renewal of your health insurance plan and thereby, enjoy an extended coverage. This gives you a comprehensive medical coverage for your entire life by opting for lifetime renewal of your policy.
- Lower chances of rejection: You have less health complications when you are young which means that the chances of your health insurance policy getting rejected are very lean.
- No Claim Bonus: As you know, a ‘no claims bonus’ is gifted by most insurance providers to their policyholders in the absence of any claims in the preceding year of a policy term. Buying health insurance at a young age allows you to avail of cumulative bonus as you will most likely renew your policy every year. As a result, the accumulated bonus gives you the added advantage of a higher sum insured and coverage which is very beneficial in later stages of life. No claims bonus ranges from 5% to 100% of sum insured under most health insurance plans.
Hope this helped you understand why getting health insurance is a must, especially the importance of insurance at a young age. To understand more about health insurance or find answers to your queries, check this out.
FAQs: Importance of Health Insurance
Why health insurance is important during Covid-19?
In the midst of the COVID-19 pandemic, no one in this world could predict the future path of the disease. You can merely anticipate what would be the level of uncertainty ahead of you and make provisions accordingly. Health Insurance is one such provision rather it is a much broader concept which is an investment in health. Coronavirus has transformed the world in every aspect; be it economically or socially. COVID-19 has a major impact on our health. With the rise in Coronavirus cases, health Insurance has provided the beacon of hope in times of uncertainties. There can’t be any debate about whether Health Insurance is beneficial. It is the best choice from the perspective of your health and your financial plan.
Will health insurance premium increase in times of medical emergency?
Health insurance is a tool using which you can secure your future. But, sometimes such provisions for the future can come with higher costs.
Medical inflation in 2018-19 was 7.14% which is approximately double the level in 2017-18 which was 4.39%. Medical costs are constantly increasing, adding to which COVID-19 has amplified the concerns. People have realized the need for health insurance and eventually, Health Insurance has seen an uptick making it the New Normal.
In times of medical emergencies like COVID-19, the health insurance premium may increase because of an increase in hospital expenses, demand for beds, future uncertainty, and fear and a threat to the disease. However, health cover is still an invaluable and indispensable advantage that you must have.