Is Health Insurance Worth it?

With medical inflation reaching 14% annually*, the occurrence of any health emergency has shaped into a situation of financial crisis. When the individual has a health insurance plan, whether corporate or personal, it acts as a financial shield against heavy medical costs. Without a health insurance plan, any emergency can make one pay the expenses from the pocket and cause a hole in savings. Now, is health insurance worth it? Let’s find out.

Benefits of Health Insurance in India

A health insurance plan acts as a safety net for an individual and his/her dependents during any health emergency and supports the medical expenses as per the policy. Let’s explore the different benefits of health insurance as follows:

Reduces the high cost of hospitalisation:

Health insurance coverage reduces the excessive expenses of bed charges, the high cost of admission into ICUs, nursing, and treatment fees. The medical expenses are nearly six times higher for private hospitals due to advanced technology, higher operational expenses, and better facilities. With health insurance, coverage for IPD treatment, surgeries, and pre and post-hospitalization expenses are covered, saving the overall cost of medical expenses.

Quick solutions for healthcare emergencies:

Health insurance is the immediate solution in case of an emergency such as an accident or any healthcare crisis, which could otherwise cause heavy expenses paid from the patient’s pocket. During such healthcare emergencies, having healthcare insurance can save one from a massive financial crunch on pockets.

Coverage for childbirth cost

Several insurers have an add-on cover under health insurance for maternity care and childbirth. This coverage also includes costs for post-natal care as well. Health insurance also covers costs of post-natal care costs and caesarean costs.

Covers the cost of major terminal disorders

One of the multiple benefits of health insurance in India is getting insured against terminal diseases. Healthcare insurance provides complete protection in the case of acute disorders, such as renal failure, or cardiac attacks.

Types of Health Insurance

There are different types of health insurance based on the individual’s preferences, the number of people to be covered and the treatments Let’s explore some of the types of health insurance here:

Critical illness insurance

Critical illness is a type of health insurance that offers coverage for medical treatment of terminal health ailments which includes stroke, cancer, brain surgery, heart attack, or any other degenerative diseases. The insured needs to provide valid documentation with medical records such as MRI scan, CT scan, and periodic blood tests.

1. Insurance amount: Averagely between ₹ 1 lakhs - ₹ 50 lakhs.
2. Waiting period: 6 months - 1 year.
3. Tax deductions: ₹25,000 as per Section 80D of the Income Tax Act, 1961.

Family floater insurance plan

The family floater plan is a health insurance plan which provides cover to support treatment of health issues for every family member. For instance, an individual buys a family floater type of health insurance worth ₹ 5 lakhs. The plan provides cover for the individual and his spouse and 3 childrenc. For an unfortunate health emergency leading to hospitalization of his wife or children, this health insurance plan will provide the required compensation to cover the medical treatment expenses.

1. Insurance amount: Can vary from ₹50,000 to ₹1 Crore
2. Waiting period: 1 month - 2 years
3. Tax deductions: ₹25,000 deductions

Senior Citizen health insurance policy

This type of policy offers benefits to individuals aged 60 years, covering all of their critical hospitalisation as well as medical expenses. The benefits of health insurance in India for senior citizens extend to offering financial support for ambulance services, annual health checkups, and coverage for major old-age health problems.

1. Insurance amount: ₹50,000 - ₹2 lakhs
2. Waiting period: 1 month - 2 years, and in case of pre-existing disorders it can be 2 years - 4 years
3. Tax deductions: The usual deduction till ₹ 50,000 can be availed, but when the senior citizens themselves buy the premium, deductions upto ₹ 75,000 can be claimed

Group health insurance policy:

Group health insurance policy, also known as corporate health insurance, is when the employer provides health insurance to the employees working for his company either free of cost or with a very nominal price as compared to the individual health insurance plan. Several employers also provide health insurance for families with a small premium to be paid or could be co-pay, or included along with the employee without any extra charges.

1. Insurance amount: This can vary from ₹ 1 lakh to ₹ 10 lakhs
2. Waiting period: This varies according to the coverage of different conditions. Ideally, the waiting period is 30 - 90 days, but could also be extended to 2 years for some preexisting conditions.
3. Tax deductions: The employer can claim 100 % tax deductions for the premium amount following the Section 37 of the Income tax Act.

Maternity health insurance

This can be an added cover to the regular healthcare insurance plan. The policy covers maternal care and childbirth. This also includes childbirth complexities and post-natal care costs. Several insurers provide cover for infertility treatments.

1. Insurance amount: Ranges from ₹50,000 - ₹5 lakhs.
2. Waiting period: Lower than most insurance plans usually ranges from 9 months - 2years.
3. Tax deductions: Maximum tax benefit of ₹25,000 can be availed.

How to Choose the Best Health Insurance Policy in India?

There are a few factors that one must keep in mind before choosing the best health insurance policy in India. Here are some key aspects to consider:

Check for the coverage benefits

Before selecting the best health insurance policy in India, always ensure to review the coverage benefits it offers. These benefits can vary from covering critical illness, pre-existing diseases, OPD, surgical procedures, etc. Review if the benefits align with your requirements as per the premium price.

Check for sub-limits

Always look for the sub-limits, as many insurance providers tend to have a high sub-limit cap. A sub-limit cap can lower the coverage because the insurance provider will not provide reimbursement beyond the sub-limit cap. For example, a health policy costs ₹ 1 lakh but has a sub limit cap of 1% on daily hospital bed rent. In such a case the insurance provider is liable to reimburse expenses coverage to ₹1,000 only for daily bed rent, even if the actual daily bed rent is ₹2,000. Many insurance providers have a sub-limit cap for their health insurance policies, and these sub-limit caps can be on daily hospital expenses to medical scan expenses.

Choose an insurer with high CSR

CSR refers to the Claim Settlement Ratio, which is an indicator of the number of insurance claims received versus the number of claims settlements. High CSR implies that the insurance provider settles most of the claims. One should opt for an insurer with a record of higher CSR, by reviewing it through IRDAI’s annual report.

Understand the waiting period

The waiting period is an important clause in health insurance. Many health insurance policies, especially for pre-existing health conditions come with a high waiting period. When purchasing a health insurance policy, the awareness of the waiting period helps the insured plan and avoid any financial burden.

Tax deductions

One of the benefits of health insurance in India is claiming tax deductions for the premium paid for health insurance. The insured can claim tax deductions for health insurance under Section 80D of the Income Tax Act.

Conclusion

With the rising medical inflation in India, healthcare insurance is imperative for every individual to mitigate any unprecedented health emergencies. When buying a health insurance policy, it is important to consider a cost-benefit analysis of the coverage of diseases with the premium price, sum assured, other inclusion and exclusions, and previous records of the insurer with claim settlement ratio. There are several types of health insurance policies, still, one of the most convenient plans is group health insurance, where the employer provides health insurance for the employees and their dependents. To get a quote aligning with your business requirements, write to us at [email protected] or visit us here.