This week, Financial Engineer tries to address puzzling questions in personal finance by considering at both sides of the story and figuring out some of the aspects you need to look at to make a choice.
In last week, I have received many emails from readers asking for the health insurance, it looks like many of us are confused about the health insurance. One of our readers writes,
“I have health insurance from the age of 27 years, currently I am 32 years old. Me and my wife were discussing about Health insurance and concluded that it’s a waste of money. It is taking a big pie of my earnings to pay the annual premium. I understand it is required, but from last 5 years I haven’t made any claim. I have already paid a premium of around Rs.1, 00, 000 and haven’t claimed anything till date. If I have invested this amount in some good stock or mutual fund it might get doubled,
Should I continue with my health insurance?”
No, Don’t Stop Health Insurance
Your family health is most valuable and prime assets. A healthy body and mind, empower you to get up in the morning and go through your job or business work and enjoy lovely life gifted by the Almighty. Health insurance is your safest investment to make sure that you will continue to enjoy good health, by taking most of the financial liability for medical care off your shoulders.
Insurance is designed to be there in the event something bad happens, which inevitably will as we both grow older. There is popular saying about health insurance:
“Buy health insurance when you don’t want it, because you may not get it when you want it.”
Additionally, in our country we live in a joint family, most of us having dependent parents and children. A severe medical crisis without health insurance can extremely devastate your family. Health insurance helps in an unexpected situation, like an accident or serious illness. It will save major chunks of your savings if the situation exacerbates.
It’s easy to get sick. Anyone can get sick anytime. But who saves for an ailment? We might save for a dream holiday, a dream house or a child’s dream. But rarely do we set aside a chunk of our salaries for a gallbladder removal or a knee replacement. So if you suddenly find yourself saying, ‘why does this happen to me’, in the middle of a medical emergency, you’ll probably have to sacrifice a dream or compromise a fund you saved for something else.
“Health insurance is a safety net and it is insurance of your wealth, Going without insurance is obviously a huge gamble, and probably a risk that many people would rather not take”
Health is Wealth
The true wealth is health because if we lose good health, no money can give us pleasure. The opportunity to do something with your life that fills you with enjoyment and liveliness is something rare and beautiful, and if there is any way to take it without throwing away your most important responsibilities to others, you should always have enough health insurance cover for you and your family members. You will feel a great sense of accomplishment in your life. Don’t let that opportunity pass, you are bound to a great deal of regrets.
Some people may elect to forgo coverage if they believe the cost is too high. But they may not be aware of all the risks and benefits involved. Health insurance provides risk coverage against expenditure caused by any unforeseen medical emergencies.
Good health is very important and it is the duty of the every individual to look after it. Do not forget that life is full of uncertainties and you do not know what will happen in the next few seconds. Hence, it is important to make provisions so that you can take care of yourself and your family members even if some disaster falls upon you.
Financial Engineer’s Take
Still, you and your family are in reasonably good health, You should continue with your health insurance. Running this sort of cost-benefit analysis is by no means exhaustive and is meant only to provide an unscientific glimpse into what it might cost one person with or without insurance. It is a path you should always take.
We live in stressful times and people fall ill at a much younger age than they did just a couple of decades before. The additional risk of not taking health insurance early is that if you start suffering from a disease like Diabetes, the assumption that you will take the health insurance policy when you need it will fail. If you don’t, you will regret it for a very long time, like the rest of your life. Always go for the reasonable amount of health insurance based on your family’s medical history.
Today an angioplasty cost between Rs. 2-3 Lakhs. A knee replacement, Rs. 3 Lakhs. Hip resurfacing Rs. 4 Lakhs and renal failure about Rs. 5 Lakhs. To make matters worse, according to the recent World Bank report, 90% of Indians will have to face a financial crunch in case of a critical illness. That’s why it is imperative that each one of us has a good health care plan to take care of all our health needs.
Always consider the rising cost of medical expenses before finalizing the coverage amount (Sum assured). Always stick with the safety net.
Two common mistakes when it comes to buying health insurance.
- We don’t act at the right time, and
- When we realize that we have made a mistake we try to over-compensate by buying too much insurance.
4 Reasons You Should Not Live Without Health Insurance
Your financial risk: The first reason why you should not live without health insurance is that it could lead to a significant amount of debt. While health insurance is expensive, so is the cost of health care. People that do not have health insurance and get sick or injured will find that medical bills add up very quickly, and those without insurance will soon find themselves in thousands/ lakh of rupees of debt.
For many people, this ultimately could force into breaking their lifelong savings or retirement fund. A person is short of money and thus, has to look for other options that could be helpful in raising money. It may be borrowing it from somebody or selling precious household assets. Besides it, one also compromise with dream plans or dream house and faces financial burden for the following years of his or her life.
Tax benefits of insurance: The icing on the cake by opting for a personal health insurance policy is the tax benefit. Premium amount paid towards the health insurance policies for insured, spouse or dependent kids and parents are tax exempted under section 80 D of the Income Tax Act.
Better treatment: Insurance may become a more attractive option once you begin to factor in the cost of treating, People with insurance are less likely to postpone needed services. If you have health insurance with a reasonable amount of sum assured, you can visit well-known and specialist hospitals for the treatment of ailments without fear of medical costs like doctor’s bill, plus the cost of a scan such as an x-ray or MRI and rehabilitation therapy. That’s where Health Insurance steps in so that one can have access to the best healthcare without fearing the financial strain.
Affordable: The fourth reason that you should not live without health insurance is that it can be found affordable. There are many types of health insurance, which range widely in price and benefits. Since there are many different health insurance providers to choose from, shopping around for a plan can almost always save money.
Now, What’s your take? Please give your opinion.