A healthy choice

Given the rising healthcare expenses, it is becoming essential to have medical insurance. Here's how to pick the right policy from the assortment on offer.

Print Edition: February 19, 2009

This is one misconception that has defied reason for a long time: while most people are keen to insure their material possessions like houses and cars, they look at health insurance as a dispensable expense. However, things may finally be changing. The rising medical expenses-healthcare costs have more than doubled in five years (2001-6), as per a CSO and Citigroup Analysis 2008-and increased health awareness are pushing more and more people to take medical cover, making health insurance practically a necessity.

Age of Reason
Pick a plan that suits you
In 20s: Take a health rider on your life insurance policy.
In 30s: Go for a standalone health insurance plan. While taking fresh insurance, look for hospital cash benefit options to cover hospital bills in case of treatment.
In 40s: Opt for a floater health plan by increasing risk cover. Look for special plans that include cancer/diabetes care. Such illnesses are real threats during this period and need higher expenses.
In/over 50s: Opt for a senior citizen health plan, including options that address OPD needs as you may have to visit the doctors frequently.

There is a wide variety of health covers on offer, ranging from ordinary medical insurance policies to riders that can be attached to life insurance plans. There are policies even for specific diseases such as diabetes and cancer that you can opt for to de-risk your finances against healthcare costs. The policies are broadly of three types, covering basic hospitalisation needs, critical illnesses and daily hospital cash reimbursements. Whether you are single or have a family, you need a health cover. However, a family floater plan is recommended for the latter instead of a standalone policy as the probability of all the members needing hospitalisation at one go is remote.

Moreover, this optimises the cost of premium, which varies for different policies and depends on the age of the insured, the extent of cover and the existing health. As one ages, the need for medical insurance goes up, but it becomes more difficult to acquire one. Some insurers do not offer cover for pre-existing medical conditions and the premiums definitely increase with age. So it's better to buy a health plan when you're young; the premiums will be lower and you'll be covered for medical conditions that may be diagnosed over the years if you renew your policy regularly.

However, while buying a health plan, make sure you understand what the policy covers and what it excludes, as also the mode of payment while settling claims, so that the plan works for you when you need it. Health insurance plans also offer tax advantage: the premiums paid by a policyholder can be used to avail of a tax deduction of Rs 15,000, and an additional Rs 15,000 if the policy is taken for parents. The senior citizens who continue with the existing policies or buy new plans can get a tax deduction of up to Rs 20,000 under Section 80D.

Few can take good health for granted, and while insurance can't prevent unforeseen events, it can help you and your family copes well in times of need.

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