During a conversation taking place at lunch hour in a Bangalore based office, Reenu said “I was reading, Our Impossible Love by Durjoy Datta. The protagonist’s mothers was so guilty of her illness that she tried to commit suicide as she didn’t want to be a burden to her family anymore.” She further said, “A person is not only emotionally weak during her illness but can also sense the financial strains and burdens on her family when they have to shell out large amounts of monies.”

The colleagues further swapped stories on how medical treatment has become so expensive.  Shailja talked about her cousin Raj who lost his savings of three years in a month when his father, 65 years of age, underwent a bypass surgery in a private hospital. She said, “Not only did his savings go, he also had to borrow money from the family to foot the bill. The procedure and hospitalisation cost almost Rs 5 lakh, and they continue spending each month for medicines, follow-up consultations and diagnostics”.

This is the reality for many young urban Indian’s today. The earlier we realize the importance of health insurance for ourselves and our family, the lesser the risk of losing our savings in times of a health crisis.

Rising Cost of Medical Treatment

We not only have to deal with increased cost of food articles and other household items, but also have to deal with inflation in Medicare or medical costs. Costs of hospitalization and surgery are spiraling. In fact, inflation in medicare is higher than inflation in food and other articles or regular inflation as it’s called. The oft-quoted figure for healthcare inflation in India is 15 per cent a year compared to overall inflation of 6-7 per cent in the past few years.  Each year, 39 million people are pushed into poverty by out-of-pocket payments for healthcare, with households on average devoting 5.8% of their expenditures to medical care, Reference – http://mynahcare.com/international/healthcare-cost-in-india-driving-millions-into-poverty-report/
What is Health Insurance?

The commonest form of health insurance policies in India cover the expenses incurred on Hospitalization, though a variety of products are now available which offer a range of health covers, depending on the need and choice of the insured. The health insurer usually provides either direct payment to hospital, cashless facility or reimburses the expenses associated with illnesses and injuries or disburses a fixed benefit on occurrence of an illness. The type and amount of health care costs that will be covered by the health plan are specified in advance.

A Health Insurance Policy like the one provided by ICICI Lombard would normally cover expenses reasonably and necessarily incurred under the following heads in respect of each insured person subject to overall ceiling of sum insured (for all claims during one policy period).

1. a) Room, Boarding expenses
2. b) Nursing expenses
3. c) Fees of surgeon , anesthetist , physician , consultants, specialists
4. d) Anesthesia, blood, oxygen, operation theatre charges, surgical appliances, medicines, drugs, diagnostic materials, X-ray, Dialysis, chemotherapy, Radio therapy, cost of pace maker, Artificial limbs, cost or organs and similar expenses.

Excuses for not buying Health Insurance

I already have a cover from my Employer

Most of the organizations provide a basic health insurance cover.  Such health insurance policies lapse once you leave the organization. A potential job change, job loss and retirement are situations when an individual faces a no health insurance condition.

Even when you have the health insurance from the employer, it usually covers individuals from minor ailments and provide a decent amount of coverage. However, this amount might often be insufficient in case of a major emergency. It is important that individuals prepare themselves for such major contingencies and make a provision through adequate health insurance cover. Our article Is Employer provided Medical insurance Sufficient? talks about it detail.

But I am young, I still have time

Buying a personal health insurance policy is cost-efficient while one is young and free from medical complications. The premium is lower and the policy offers comprehensive coverage in comparison to a policy purchased at an older age. As an individual grows older, the cost of the cover increases and if one develops health issues, the health insurance company tends to exclude pre-existing conditions which defeat the whole purpose of buying a health insurance. Most health insurance companies have an upper age limit for the policies, which means one would have limited options after retirement. One can enjoy the benefits of cumulative bonus in the form of no claim benefit if they renew the policy without any claims. A good option to protect yourself and your family at a young age would be to purchase a family health insurance. ICICI Lombard enables users to calculate family premium easily on from their website via few simple steps.

I think I am insured, but not sure what it covers

Most financial planners suggest that the first step in any financial plan should be to ensure that one has adequate insurance, including health insurance. One must get adequate health insurance cover for self and family even before starting to save for one’s goals. What’s more, the premium paid for health insurance also provides a tax benefit by reducing your taxable income and thereby your tax liability.  Just like helmet protects one from accident, it’s a protection from heavy medical bills and peace of mind which is priceless.
Our article Why don’t we buy Health Insurance Plans? talks about it in detail.

Tax Benefits on Health Insurance under Section 80D

For financial year 2015-16 tax benefits on health insurance are as follows:

• Deduction is available upto Rs 25,000( raised from Rs 15,000 in FY 2014-15).
• If individual or spouse is more than 60 years old the deduction available is Rs 30,000. (raised from Rs 20,000 to Rs 30,000).
• For uninsured super senior citizens (more than 80 years old) medical expenditure incurred up to Rs 30,000 shall be allowed as a deduction under section 80D. However, total deduction for health insurance premium and medical expenses for parents shall be limited to Rs 30,000.
• You can further claim a tax deduction for the insurance premium of your parents. The maximum limit for this deduction is Rs 25,000. If the parents are a senior citizen, the maximum limit is 30,000.
• Note From AY 2013-14, within the existing limit a deduction of up to Rs. 5,000 for preventive health check-up is available.

Buying health insurance from reputed insurance companies like ICICI Lombard protects us from the sudden, unexpected costs of hospitalization (or other covered health events, like critical illnesses) which would otherwise make a major dent into household savings or even lead to indebtedness.

The healthcare costs are rising. Diseases and accidents do not come with warning and if they require unexpected hospitalization then is not just a major threat to your health but your savings as well. It makes me wonder Are we suffering from a serious medical condition called no health insurance? Buy health insurance when you don’t want it, because you may not get it when you need it.