5 min read
Choosing health insurance is one of the most important decisions you’ll make. It’s not just about health; it’s also about your family and your future. What would happen if you were unable to work because of illness or injury? How much money would that cost? You can’t afford to take health for granted, which is why a health insurance policy becomes important.
About 65% of healthcare expenses in India is done out-of-pocket, i.e. not paid by insurance or any corporate entity, which is extremely high as compared to any of the developed western countries where it is only 13% such as Germany. These high out-of-pocket medical expenses push about 5.7 crore Indians into poverty every year!
A health insurance policy is one that covers the medical costs that incur when you fall sick or injure yourself and you need medical attention. The policy covers hospitalisation and the associated medical costs so that you don’t have to put a dent in your savings.
Health insurance is a legal agreement by the insurer and the insured wherein the insured promises to pay a premium for the tenure, and the insurer will pay for the expenses incurred on hospitalisation upto the coverage limit. The policyholder will also get tax benefits for paying the premium as well.
Thus, health insurance, though not mandatory in India is very important for every individual. The insurance penetration in India is only 3.7% of the GDP of India as compared to the global average of 6.31% of the global GDP.
The importance of a health insurance policy can be seen from the below-mentioned points –
A health insurance policy provides extensive coverage so that most of your medical costs get covered under the plan. You can avail coverage for the following –
a. Room rent
b. ICU room rent
c. Nurse’s fee
d. Doctor’s fee
e. Surgeon’s fee
f. Anaesthetist’s charges
g. Ambulance costs
h. Pre and post hospitalisation expenses
i. Daycare treatments
j. Organ donor treatments, etc.
Moreover, health plans also allow health check-ups, sum insured refill benefits, maternity coverage, OPD coverage, etc. so that you can enjoy all-round protection and safeguard your finances.
Tip: Check all the possible options available to you and then make an informed decision based on your requirements. Do not opt for riders who are not useful in your scheme of things.
Health plans are available as family floater policies which include all your family members under a single plan. This helps you avail of umbrella coverage for your whole family so that if any member needs medical attention, you don’t have to bear a financial brunt. Moreover, the family floater coverage has affordable premiums and makes it easy to service a single policy for multiple family members rather than independent policies for each one of them.
Tip: Do not cover your parents in the same if they are old, as they would have higher claims and you would lose out on your No Claim Bonus. It is advised to have them covered under a separate Senior Citizen Health Insurance Plan which is specially designed for the senior citizen.
When you have the backing of a health insurance policy, you can avail yourself of quality healthcare treatments without worrying about their affordability. You are secure in the knowledge that the medical costs would be handled by the health plan and so, you can get treated at reputable hospitals and get all the necessary treatments for recovery without worrying about the financial drain.
Tip: Opt for health insurance plans without any sub-limit so that the entire amount can be utilized for higher quality and advanced treatment.
Health insurance plans come in many variants. You can choose a policy as per your suitability. For example:
a. An indemnity plan helps in covering your medical bills and is, thus, a must before opting for any other variety.
b. Thereafter, you can choose a super top-up policy for enhancing your coverage at affordable rates.
c. Critical illness plans provide a fixed benefit coverage on diagnosis for any critical or terminal ailment.
d. A senior citizen plan can help fulfil your parents’ health insurance needs while a critical illness policy covers you against dreaded medical illnesses.
e. There are even COVID-specific health plans to help you battle the pandemic, etc.
These different types of policies ensure that you can avail of all-around protection against medical emergencies and come out a winner.
If the aforementioned reasons were not enough, a health plan adds a cherry to the cake with its tax benefits. The premiums that you pay for the health insurance policy are allowed as a deduction under section 80D from your taxable income.
a. You can claim a deduction of up to Rs 25,000 for premiums paid for yourself and your family. This includes Rs 5,000 for preventive health check-ups as well.
b. The deduction limit is Rs 50,000 if you are aged 60 years and above.
c. Furthermore, if you also insure your parents, you get to claim an additional deduction on the premiums paid for them.
d. This deduction is also up to Rs 25,000 and increases to Rs 50,000 if your parents are aged 60 years and above.
e. So, by paying health insurance premiums, you can claim a maximum deduction of up to Rs.1 lakh.
f. If you are in the 30% tax bracket, this deduction converts to a tax saving of Rs. 30,000.
A considerable figure, isn’t it?
The bottom line
These reasons stress the importance of a health insurance plan and make it a necessary part of your financial portfolio. While you toil day in and day out to earn and save for your financial goals, a medical emergency has the potential to wipe out your savings and leave you in financial stress. When you have a health insurance plan you can avoid this eventuality and be financially prepared in medical contingencies.
So, opt for comprehensive health insurance coverage for yourself and your family members and invest in peace of mind. Medical emergencies might come unannounced but you and your family would be financially protected to take care of such situations if they ever arise.
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