individual health insurance advantages

7 Advantages of Buying Individual Health Insurance

Despite increased awareness about the benefits and importance of Health Insurance, we see limited adoption by Indians till date. According to Statista, the overall penetration of health insurance in India in the Financial Year 2018 was as low as 35 per cent. Remove the government-sponsored health insurance, and the numbers appear quite discouraging. 

We’re already impressed by you for two reasons. Firstly, you recognize that the diseases of the future are becoming too unpredictable and complex to be left to chance. But more importantly, you are also planning effectively for the future by purchasing health insurance or at least learning more about it for now. 

If you have conducted a little research, you must have noticed that Health Insurance comes in a lot of diverse shapes and sizes. While we may not be able to talk a lot about them all today, we can give justice to a few. So, for today let me stick with the most fundamental and widespread health insurance, i.e. the ‘Individual Health Insurance’. Let us get started. 

Suppose you are a young single adult living all alone in a city you must be thanking your stars. You don’t need to think about your spouse, your children or any of the dependents for that matter. All you have to do is take the individual health insurance and take care of yourself. The options start widening when you have other family members or dependents. You can get the lucrative Family Floater Plan, which takes care of all of your family members in a single policy. The same happens when your employer pays for your health insurance in a Group Insurance Plan, wherein all the employees are entitled to the insurance until they are working at the place. 

Despite all these new complicated plans, the individual health insurance plan has a plethora of advantages. Let us look at these advantages one-by-one.

1.    Tailor-made for you

Well, this is the first thing you expect when you hear the word Individual Health Insurance. Since you are the only beneficiary of individual health insurance, you can make this policy as per your specific requirement. You can look at your pocket, your needs and accordingly decide the required coverage at the cheapest premium. Such a kind of flexibility is unfortunately not available with other types of insurances such as Group Insurance plans or Family Floater Plans. For example, if you work at a place with a high chance of an accident, you can take a policy which has a higher coverage for accidents than any other critical illness. Similarly, your young sister can take a plan with a higher maternity cover. 

2.    Guaranteed coverage amount

Well, this is a feature which is prevalent in almost all health insurances; group and individual plans. The feature states that if you buy health insurance, you would have a dedicated sum for yourself in case you need medical treatment. For example, if you buy a health insurance policy with Rs.2 lakhs coverage, and if you fall ill tomorrow, you are entitled to the entire amount of Rs.2 lakhs. There are no differences or hidden costs between your coverage amount and what you are entitled to get.  

3.    Everyone is individually covered

One of the most significant advantages of an individual health insurance plan over group plans is that you all have separate coverages available. So, you don’t have to think about whether your heart problem would take away your sister’s claim on her hip surgery or vice-versa. Even if a family member exceeds her/his amount, the other family members are not impacted. For example, if you brought Rs.2 lakh health coverage for every member using separate individual health insurance plans, and your brother requires Rs.4 lakhs for the treatment. That amount wouldn’t be deducted from your coverage amount. Your coverage stays intact. This isn’t the case with Family Floater or Group insurance plans in which every member is entitled to draw from the same combined coverage pool, and one person directly impacts the other person’s coverage. 

4.    Focused Individual Protection

One additional feature that makes an individual plan more attractive is that every person is a unique entity. This means; just as people’s physical and mental constitutions vary, so also their medical and healthcare needs also vary. Thus, the individual health insurance policy covers personal health’s risk without getting affected by the overall family risk. Let me explain this to you by an example. A lot of policies have waiting periods for pre-existing illnesses. If you are already suffering from the same disease, you cannot claim coverage for a specified period (usually a year or two). Now, consider that you have diabetes before you take insurance, then individual insurance protects your family as they can now take medical claims against diabetes. Such a thing is not possible in group insurance plans. 

5.    Value for Money

Individual Health Insurance is a good value for money plan as they price every individual in a family based on their respective risk. So, a 25-year-old young, healthy adult would be priced differently to a 50-year-old high-risk individual. Thus, every family member is priced reasonably according to the risks they possess. This is not the case with the Family Floater Plans. These floater plans calculate the premium based on the age of the riskiest person in the family pool. This makes the individual insurance policy relatively cheaper than its alternative. 

6.    Discounts on Bulk Purchases

Insurance Companies, like all other businesses, give a bulk discount. In insurance terms, it means that if you purchase individual insurance policies beyond a threshold limit, you will receive certain extra benefits. These could include reduced premiums, higher coverage etc. A simple example is that when you buy a policy for five family members, two of them get a discount on their premiums paid and at times a child is covered free of cost. This makes the cost of individual health insurances lower than family floater plans.

7.    Good for Financial Planning

Health Insurance not only helps you with health coverage, but you can use it as an effective tool in Financial Planning. This is because under Section 80D of the Income Tax Act, buying health insurance comes with tax benefits. This is due to the deductibility of the premium paid while calculating the taxable income. This deduction is Rs.25,000 per financial year but it goes up to Rs.50,000 in the case of senior citizens. For example: if you have a taxable income of Rs.2 lakh and you buy health insurance coverage for which you pay a premium worth Rs.5,000, the total taxable income falls to Rs.195,000. Thus, health insurance helps you save on taxes.

We hope you learned a significant bit that sometimes the most fundamental thing is a lot more creative than all the other complex options in the market. Though group insurance plans have their advantages, the greater flexibility along with several other benefits we discussed makes the Individual Health Insurance Plan relatively more lucrative. 

FAQs: Individual Health Insurance Advantages

Does Health Insurance cover kick in from Day One?

No, health insurance cover usually does not begin from Day 1. Firstly, there is an initial waiting period of 30 days after the policy commences. However, this rule does not apply to accidents, and they are covered from Day 1. Other than that there are two other significant conditions:

Pre-Existing Ailments: All pre-existing ailments are covered after completion of the pre-defined waiting period, which is usually 48 months.
Exclusion for Certain Diseases: Certain diseases such as Hernia, Piles are treated only after an initial waiting period of 24 months to 48 months.

What happens if policy lapses during hospitalization?

There are two separate cases and we need to look at them separately:

1. In case the admission to the policy happens before the policy expiry date and you have duly informed the insurance company about the same, the insurer will honor the claims subject to the terms and conditions.

2. If the hospitalization happens during the grace period or after policy lapse, then as per the rules the company is not liable to pay anything. However, these are discretionary decisions so that you may inform the company.

What can I do if I am dissatisfied with my Health Insurance Policy?

Health Insurance Policyholders are allowed to port their policy from their existing company to some other company. This facility was introduced in 2011 by IRDAI. Porting has a lot of advantages like not finishing the waiting period all over again. However, a request needs to be made 45 days before the date of payment renewal, and the new company could reject the same if it does not meet their guidelines.

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