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Health insurance: Points you must remember

February 11, 2014 09:04 IST

The costs of being under-covered are so high, that they’re just not worth it. More than anything else, a serious illness can set you back in life. For starters, it can impact your future work and career prospects. 

Last year, my mother was treated in a leading hospital for a hip replacement. Unfortunately, she had a fall in the house that necessitated this.

A few other complications ensued and by the time we were done and brought her home, the total cost of treatment was Rs 10 lakhs! My parents each have 4 lakhs of health insurance.

Needless to say, Rs 6 lakhs was paid by the family out of our savings. Why do my parents not have enough health insurance? The answer for them, and for a lot of us is quite simple.

When my dad bought health insurance, Rs 4 lakhs seemed more than enough. It no longer is and at their age, no one will give them additional insurance at a price that makes any sense. Keep in mind, the bill of Rs 10 lakhs was not caused by any fancy choice of room or India’s best surgeon or any such ‘frills’.

If you pick a good hospital (which one of us wouldn’t?) and happen to need a variety of treatments including the ICU, you can rest assure that costs will add up - and add up very quickly.

Most of us in our 30s and 40s, would look at the above examples as an ‘old people’ problem. Not quite. There’s a massive increase in heart ailments in people in their late 30s and early 40s.

Did you know that heart treatment costs can go anywhere from Rs 5 lakhs to Rs 25 lakhs to treat in the better hospitals in Mumbai?*. Do you know that cancer treatment can cost well over Rs 5 lakhs per year to treat in Delhi?*

Assuming nothing will happen to us because we’re healthy now is downright silly. Do you know that your health insurance premium jumps significantly from when you’re 39 years old (under 40) to when you cross 40 ? Sooner or later you’re going to need it. Why not lock in a lower rate earlier?

Someone once told me that the reason Indians don’t worry about buying enough health insurance is that we truly believe that since we’re healthy as were our parents, illnesses are things that happen to someone else, not us.

While in the hospital (when my mother was being treated) I met numerous people whose relatives were unwell who just some time ago, seemed perfectly fine.

The costs of being under-covered are so high, that they’re just not worth it. More than anything else, a serious illness can set you back in life. For starters, it can impact your future work and career prospects.

What’s worse, if you had to dip into savings to pay hospital bills, your future savings will be hugely reduced. Look at this another way – suppose you (39 years old) currently have a company health insurance cover of Rs 3 lakhs.

Getting another Rs 7 lakhs family floater costs less than Rs 6000 per annum. Now, suppose someone in your family got treated and the bill was Rs. 10 lakhs. The 7 lakhs you pay from savings will cost you Rs 56,000 per year (at 8% interest) as opposed to Rs. 6000 per year in premium. So, ask yourself these questions:

Do you believe there’s no chance of your needing hospitalisation in the near future?

Will you choose a lower quality of hospital and/or doctor because you’re insurance amount is inadequate ?

So, why wait until you’re older or worse, until something happens to someone in your family to realize that adequate health insurance is a must?

 (*Source: Paramount Healthcare Management)

The writer is a Co-founder and CEO of Bigdecisions.in 

Manish Shah