How Much Health Insurance Do You Need?

Updated on: 13 October 2019 9:29 pm

Kolkata, October 13: With rising medical costs health insurance is a must. With advancement of medical science, sophisticated care is available for a large range of diseases and good healthcare costs money. Lifestyle diseases like cardiovascular diseases and diabetes are becoming more and more prevalent among the urban population. What’s more, medical inflation is higher than general inflation at about 15 per cent. All these make it very important to have adequate medical insurance. Having a health insurance plan is the starting point for any financial plan. Even before one starts investing for one’s goals, one should get adequate health insurance for self and family.

You may be in perfect health now, but illness seldom come with prior warning. If you buy a policy at an early date and renew it without a claim for some years, it will stand you in good stead when a claim arises.

For many of us, the employer provides health insurance. However, one may change the job or even be affected by a job loss. Private health insurance is thus mandatory.

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How much health insurance cover do you need?

There is no fixed rule for how much health insurance one needs. “I would suggest a cover of Rs 5 lakh for people earning up to Rs 20 lakh, 10 lakh for people earning up to 50 lakh and Rs 20 lakh for people earning Rs 50 lakh and above. Always choose a family floater health insurance cover,” says Anant Ladha, founder, Invest Aak For Kal.

Another school of thought says that people living in Tier 1 cities should have a health cover of at least Rs 10 lakh because treatment costs in such cities are high. For those staying in Tier 2 and Tier 3 cities, the health insurance cover may be Rs 5 lakh.

One should look for top up covers with a deductible to have a bigger health insurance cover. Such covers are cheaper than basic plans. You have to select a threshold limit for at the time of purchasing the policy. Any claim over and above the threshold limit is paid by the insurer. In this case cove up to your threshold limit is covered by your regular policy.

Here are a few important things to keep in mind when buying health insurance. Always disclose true facts about existing diseases as not making proper disclosures may result in the claim getting rejected. “ Now some plans also offer refunds on the submission of medical bills. These can be used to get a discount on the premium paid. Always use this benefit,” says Ladha.

One may also choose specific critical illness plans that pays the sum assured irrespective of the actual cost of treatment, but is it not a must “ Even if you go for them, take it with term insurance as the premium in this case remains constant,” adds Ladha.