Health insurance is one of the most critical components of your financial planning portfolio. At the same time, it remains one of the most misunderstood and least researched decisions we usually make. In most cases, there are numerous misconceptions that surround health insurance. In our latest series of blogs on Myths around Health Insurance
we’ll try and bust some for you.
Health insurance is more appropriate for use in old age. That is also the right time to buy it.
I am fit and healthy. I do not need health insurance. The reality is-
Even healthy people can inflict illnesses like dengue, malaria, food poisoning.
Incidence of critical illnesses in the 26-35 year age group went up by 124 percent in 2012-13. (Reference)
The fact that most of us feel “invincible” when we’re young stops us from considering (leave alone buying) health insurance. We consider ourselves invulnerable to any illness or disease especially when we are under 40 and not suffering from any health condition.
However, we forget that we are living at the peril of the sedentary lifestyle. The increased trend of infections as a fallout of globalization (H1N1 virus), the unpredictability of contracting cancer and other major illnesses has made it more than obvious that we just cannot ignore the health risks, which may befall us.
Also we cannot overlook that the fact that heart diseases now commonly occur in individuals between the ages of 35 to 40, individuals irrespective of their age are prone to cancers.
Health insurance plans are not designed to give returns, but they’re are made to adequately cover chances of unfortunate expenditure. In simple terms, to ward off the risk of financial crisis due to illness. Hence, it is not prudent to wait until illness befalls us, assuming that insurance companies would readily accept to give us insurance coverage. To wait for too long to obtain health coverage is likely to make us face the risk of not getting accepted into the insurance fold, because of impending old age or existence of an illness.
It is important to understand the advantage of buying health insurance early in life to ensure a hassle-free life-long coverage in the future. Moreover, the regulatory guidelines mandate the insurance companies to ensure continuity of cover for life once an individual has been accepted under the plan.
Health insurance will cover all the healthcare expenses.
While choosing a health insurance plan, it is important to look for all the details regarding what the plan covers and what it excludes.
The most popular plans in health insurance market are hospitalization reimbursement plans, wherein most insurance companies offers a variant of the same plan/benefit. They are commonly known as “Mediclaim” plans.
In most cases, the health plan essentially covers all major expenses incurred at the time of hospitalization and these expenses are likely to get cashless approvals or reimbursed. At the same time, there are bound to be a few expenses which may not get covered. For example, the plan may have conditions on coverage like sub limits for certain procedures, restrictions on type of hospital rooms that can be availed, copayment or deductible, which requires the policyholder to pay for part of the expenses.
Also, there are fixed benefit plans like critical illness insurance that offer lump sum amount upon the occurrence of certain critical illnesses like heart diseases, cancer among others and there are hospital cash products that give fixed benefits only for hospitalization. In this case, only the fixed amount as per the policy is paid and no other expenses are borne.
Therefore, it is most advisable to spend time to read and carefully understand policy terms to avoid any unpleasant surprises while making a claim.
I am covered by my employer under the group health insurance, therefore I do not need individual health cover.
As the name suggests, a group health insurance offers coverage to a group of people, and provides certain standard features for the cover. Complete reliance on this type of coverage may not be the most prudent idea as it’s a generic plan and may or may not suit your medical insurance requirement. There are a few more points that are worth noting if you only have a group health insurance policy
This coverage remains with you as long as you remain employed with that particular employer. A job change and retirement may lead to ceasing of these benefits.
Most group plans come with a copayment clause and may pose limits on the vital elements of a health plan like sub-limits and hospital room rent. There is also a higher chance of change in company policies that can result in the sudden modifications regarding Terms & Conditions of group health policy
Group insurance has a limited sum insured, varying from 1 Lac to 3 Lac, which may not be sufficient to cover all the family members, especially if you have elderly parents to take care of. Moreover, a group plan may or may not cover all the members of your family.