Why you should have health insurance in your 40s

While many of us had the misfortune of seeing up, close and personal the challenges faced when parents get hospitalized, we also had the opportunity to learn some valuable lessons. For one, prioritizing one's health above all else was clear. Second, was the rude realization of the impact of having inadequate health insurance. Seeing my family having to pay a large portion of a hospitalization bill from our savings,ensured all of us siblings significantly upped our health insurance amounts. In my case that meant realizing that Rs. 3-4 lakhs per person in my family (of 4) was not enough and got that upped to a Rs. 25 lakh family floater that covers any person for upto that amount.

While people like me learnt our lessons the hard way, most people who've been fortunate enough not to have skirmishes with hospitalization face rude shocks sometime down the road. While a lot of print has been dedicated to young parents getting covered as early as possible, the focus of this piece is on those, who to my mind are a very high-risk group. I define this group as people in their late forties to early fifties owing to the following:

• Their employer health coverage amount has more often than not, not kept up with their increasing requirements. For e.g. it's not uncommon to have a Rs. 3-4 lakh coverage amount for employees of all ages. So, while it's not too bad for a single 25 year-old employee, it's insignificant for a 50 year old with a family of 4. As per our healthcare costs treatment data, a family of 4 in Mumbai where the oldest member is 50 years old needs about Rs. 14 lakhs of health insurance to consider his or her family well covered for health ailments. In the above example, the employer provided cover is less than 25% of what it needs to be.     
  
• They often have only a handful of years left to go before they retire. It's not uncommon to have a large proportion of this group to be almost entirely reliant on their employer for health insurance. If they move to part time jobs or full retirement, it's often too late or too expensive to get a new health plan "       
• One of the biggest risks that's often overlooked is the fact that your health needs will increase exponentially from here on. Most of us (myself firmly included) have a very strong belief that we'll continue to be as healthy as we've been so far simply because we take reasonably good care of ourselves. The process of aging, is something we're likely to be immune to! Obviously, nothing could be further from the truth. And, the worse thing to be doing, is to seek health insurance after you've contracted an ailment or disease. It's fairly common to have a waiting period during which the insurer will not cover certain ailments. As a general rule, it's best not to need a single rupee of insurance in the first year of a policy. In several cases, there might be a 3 year waiting period for some ailments.So, as contradictory as it sounds, you really need to be getting covered well before you need it.        
• Relatively late in your working life (if you're in your fifties and are looking to hang up your boots on of before your 60th year) is the worst time to have to remove money off your savings to pay for hospitalization. Apart from the obvious annoyance of having to part with your hard earned money, it's a pot that could have grown if you'd let it stay invested. For most people, it's not easy to replace that pot, so carefully put together. So, it's as much about health insurance as it is about health preservation.
  

I've had conversations with several people like my friends' parents who lament not having enough coverage when they needed it the most. They went decades with a couple of lakhs of health cover thinking it was good enough. In their late sixties or early seventies when they realized they needed more, they either couldn't find themselves a company that would cover them or one that was so expensive that it was no point. In our case, I looked for a plan for my 80 year-old father. While most companies wouldn't touch a person above 65 years of age at the time of commencement of a plan, I finally found one that did.

Only to realize that the annual premium for a Rs. 10 lakh plan was about Rs. 2.5 lakhs meaning, that in 4 years, the entire coverage amount would have to be paid in premiums alone! I'm not even getting into the number of conditions and diseases they wouldn't cover for the first couple of years. As you would imagine, buying that plan made no sense. As a result, all medical expenses above Rs. 4 lakhs (that's their plan limit) come from their savings. Does that mean we will compromise on the quality of healthcare they will avail - absolutely not. Does that mean a big, potential dent in savings - absolutely yes.

At least our parents had the excuse of not really having any meaningful product choices and hadn't seen the kind of inflation we've come to see. What excuse do we have?

 The column is written by Manish Shah, Co-founder and CEO, Bigdecisions.com