Do you need health insurance?

Health insurance is a risk contract, based purely on probability. If you are under 35, you are likely to be healthy and free from any chronic illness. 

From a probability standpoint, you’re unlikely to use health insurance anytime soon. For this very reason, insurance companies will price your risk lower than a 45Y applicant. 

With our sedentary lifestyle, it is almost certain to get a lifestyle-related illness like diabetes and hypertension once you turn 30. Recent research shows that 1 in every 3 or 33% Indians above 30 gets a lifestyle illness. 

With the recent change in IRDAI guidelines, insurers can not reject you from getting a cover because of lifestyle illness. This, however, does not stop them from pricing/revising the premium based on newfound risk. 

Getting a health cover while you’re healthy is your best shot to ensure coverage at a later stage at an affordable price.


Is health insurance just for health?

Talk to any independent fee-only advisor, they will recommend you get health insurance for yourself and your loved ones. Adequate health insurance covers your investments as much as it covers your health. 


Does my employer insurance count?

No. An employer-sponsored health cover is valid as long as you are employed. You can indeed migrate from an employer plan to retail by giving a notice of 90 days to your employer before leaving, but how often have you exercised this while switching jobs?

Some of the questions you should ask yourself:
(a) Will this cover be sufficient 5Y down the line?

(b) What will happen when you switch job to an employer that does not have the same benefits as your previous employer?

(c) What happens when your current employer reduces the coverage or benefits for all?

(d) Who will ensure you when you take a sabbatical or retire?

(e) Will you be able to get a non-employer policy after your health deteriorates once you age? 

Employer-sponsored policies are good additional/ supplementary cover but should never be considered your primary health cover.


How much coverage do I need?

Decide on health cover amount based on the following consideration:
(a) LifeStage: Cover should be sufficient to accommodate natural additions; like a spouse or kids. You can increase the cover subject to the insurer’s approval.

(b) Inflation: A routine procedure costing ₹1L today will cost ₹20L more after 15Y. A cover that seems sufficient today will become inadequate with rising costs.

(c) Lifestyle: A knee replacement cost will vary from Govt to a private hospital. One should check the average price of a room in their preferred hospital. Hospital charges are anchored based on the room a patient takes.

There is no ideal health cover, but generally, most advisors consider:
(1) Health cover should be at least 50% of your annual income.

(2) Coverage should be able to cover the cost of a Heart transplant in a hospital of your choice. Usually costs ₹5-8 lakh.


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