As the popular adage goes “Health is Wealth”. To protect this wealth, it is important to start investing in it at an early age. Medical emergencies tend to come unannounced, and the chances of one happening have only risen in the last few decades. The medical advances mean that you are far more likely to survive an emergency, but that does not mean it will not leave you burdened with debt – if you are not prepared for it. The best way to prepare for a medical emergency is a health insurance.
Still not convinced? Here are 9 reasons for you to buy health insurance right now!
Medical expenses are constantly increasing
A 2018 study by Mercer Marsh Benefits found that the medical trend rate – that is the rate at which per capita medical expenses rise – will be double the inflation rate in India. Most experts believe that this relationship will hold for at least a few years to come. It was further noted that the rise in out-patient expenses which much steeper than the hospitalization expenses. An increase in the incidence of non-communicable diseases like heart disease, stroke, cancers, chronic respiratory diseases, Alzheimer’s disease, mental illness, diabetes, and kidney diseases is resulting in a subsequent increase in the employer-sponsored healthcare costs.
This means any savings you had made towards your emergency funds may no more be sufficient even if they have been increasing at the general inflation rate. Having a health insurance can take away the pain of worrying about the rising health costs, as premiums rise at a much lower rate – if you purchase health insurance when young.
No need to compromise on Medicare quality
Rising medical costs have resulted in a financing gap for people who depend on their own savings to meet medical expenses. This means that they either have to borrow – from informal channels like family or formal channels like banks and money lenders – or have to compromise on Medicare quality. When households have no option but to use public health facilities, it has been observed that they are stuck in a waiting queue, have to deal with low quality care and even have to make under-the-table payments. A health insurance policy is a way to avoid all this and get the best quality healthcare. Further, insurance companies are large buyers of healthcare giving them an ability to negotiate on prices that individuals lack, especially because on an information asymmetry between caregivers and patients.
Reduces blow to one's finances
According to the latest report from the Public Health Foundation of India, released on June 6, 2018, 55 million Indians were driven into poverty due to out of pocket expenses on healthcare in 2017. To put this in perspective, this is more than the population of countries like South Korea, Spain or Kenya. Out of these, 38 million i.e. 69% were impoverished because of paying on medicine alone. According to 2011-12 figures provided by National Sample Survey, over 80% of Indians make out of pocket payments for healthcare needs – buying a health insurance will ensure that you are not one of them and the likelihood of your other savings and finances being blown away in an emergency are reduced drastically.
Family is protected and offered peace of mind
Remember that when you get sick, it is not just you who is affected. If the medical emergency is such that you have to be hospitalized, you may also be losing income. You family depends on you to meet at least some of their needs. You may be building up some savings for your kid’s higher education, or you may have made investments for your daughter’s wedding – in case of emergency, the family will have to dip into these for funds when you do not have a health cover. A health insurance will ensure your family is protects, some income substitution is provided for and they can deal with the emotional stress without also having to worry about the finances.
Tax benefit
The government of India offers tax benefits on the purchase of health insurance to encourage individuals to invest in the same. Under Section 80D of the income tax act, amount that an individual or a Hindu United Family pays to keep an insurance policy in force, i.e. health insurance premium can be deducted from the taxable income. This deduction also includes any amount (up to a maximum of Rs. 5,000) spent on preventive health checkups for yourself, your spouse or children in case of individuals or any member of the HUF.
The deduction allowed for any individual under the age of 60years is Rs. 25,000. For individuals over 60 years, the limit is increased to Rs. 50,000 considering the higher anticipated cost of healthcare. A further deduction is allowed for health insurance premiums paid for your parents’ insurance. The cap on this is Rs. 25,000 for parents under the age of 60 years and Rs. 50,000 for parents over the age of 60 years.
The total permitted deduction under section 80D is Rs. 1,00,000 for individuals and Rs. 50,000 for HUF.
Insurance offered by employer may be inadequate
Many individuals avoid investing in a health insurance as their employer provides a group health cover as well. This may not be a good strategy as the insurance provided by the employer may not be adequate. As a rule of thumb, your health cover should be at least 9 times your monthly income. If the employer health insurance is less than this – you must invest in additional health insurance. Further, pay attention to deductible, co-payment and exclusion clauses in your employer provided insurance – if these feel excessive, opt for additional cover to make sure that you do not have to pay out of pocket.
During a sabbatical from work or in between jobs insurance offered by employer would not be valid
If you are banking on the health insurance provided by your employer to help you in the time of need, remember that this insurance is only valid till the time you are in employment. This leaves you exposed to a financial risk when one is between jobs or on a sabbatical. You may not be planning to switch jobs, but no job comes with a 100% guarantee – the company may choose to downsize or may even be locked down because of circumstances out of your control. A health crisis at the same time may cripple your family’s finances. It is important to be prepared for all eventualities – and investing in a health insurance is a great way of doing so.
Environment and Lifestyle constantly exposes us to risks
Increasingly sedentary lifestyle coupled with the deteriorating environment exposes each of us to increased health risks compared to even a few years back. A recent study conducted by the Institute for Health Metrics and Evaluation and the Public Health Foundation of India analyzed 79 health risk factors contributing to loss of health as well as death found that lifestyle diseases have become the top killer in India. High blood pressure, high blood sugar and the pollution in household air are responsible for 7.8%, 5.2% and 4.7% of total health loss in the country. Tobacco smoking of all kinds, alcohol usage, high blood cholesterol and outside air pollution are other major culprits in the deteriorating health profile across India. The latest report from CSE found that more than 61% of all deaths in India can be directly attributed to lifestyle or non-communicable diseases.
It has been observed that savings to combat health expenses have generally not kept pace with the higher probability of a health incident. Therefore, it is advisable to buy a health insurance to cover the rising risk.
Rise of critical illness ailment
Today you are much more likely to get a critical illness then were your parents at your age. That said, the good news is that you are much more likely to survive your brush with such an illness, given the advances made by the medical science. But the fact remains that high cost of such treatment can push one to penury. Doctors around India have sad tales to share of patients who chose to abandon treatment rather than make their families toil in poverty.
Take, for example, cancer that can be linked to over 7% of deaths in India. The cost of treatment can run into many lakhs as a single vial of Herceptin – arguably the most effective drug against breast cancer – costs Rs. 75,000 to Rs. 1,00,000. A patient may need anywhere between 6 to 17 vials during the course of the treatment. Drugs administered to cancer patients cost anywhere in the range of Rs. 25,000 to Rs. 50,000 a cycle and a patient may need 10 cycles per course. This is not all – along with the high treatment costs and hospitalization charges, the family also has to deal with the loss of income. Let us not forget that any loans the patient would have taken will continue to demand their EMIs regardless of the individual’s medical condition.
Therefore, it is essential that we are prepared for such eventualities. The best way forward is to invest in a health insurance policy that provides a critical illness cover. Before buying the insurance, make sure to check the list of illnesses covered and ensure that the illnesses you maybe more susceptible to are covered.
