CashCow Chapter 2.4 – Medical Insurance

My father never had any health insurance and neither my grandfather did.

Any guess why?

Some possible options…

  1. Health insurance option was not available
  2. The healthcare was not expensive except for some really rare cases
  3. People were not falling critically sick

The reality is that people thought that health insurance is just a waste of money.

Fundamentally, they believed that

  • Nothing critical gonna happen to them
  • Even if something happens, the family & friends would take care of them

Essentially,

Family & friends were the health insurance. The strong community bond was the insurance for humans 20 years back.

If you still live in that strong culture…

.. I don’t want to sell you health insurance even when I am an insurance agent with Religare.

But…

but you should pick the best insurance for you if you are a part of the broken culture… where no friend or family member would come to support you financially in a critical medical situation.

Sometimes, it’s not whether your family & friends would come to financially support you… 

It’s the question of your pride, self-esteem (& ego).. that would you open your hands to take the support?

You may take the money from relatives as a loan but not as a favor.

And the loan has to be returned. Maybe without interest.

My father had to sell a part of his property for the treatment of my mother 15 years back. I wish he had taken insurance.

We all had to take the financial hit.

That was the period when I learned how to save pennies to continue my studies.

That was the time when I worked part-time along with my studies.

I operated a DJ computer at wedding parties. 

That’s how I supported my expenses in college time.

Later, I started selling computers and worked at a call center.

Anyways…

It’s not about my story…

It’s about how would you get financial support in case of a medical emergency.

Would you;

  • Liquidate a part of your existing investments
  • Borrow from friends or relatives
  • Take support from your insurance company

How Much Should be the Medical Insurance

The amount of Medical Insurance cover must have a direct relation to your investments.

The more the investments, the lesser will be the dependency on medical insurance. If you have Rs. 10 Crore of investment then paying Rs. 5 Lakh hospital bill will not be an issue for you, right?

But, if you only have Rs. 1 Lakh of investment then paying a medical bill of Rs. 5 Lakh would not be possible without taking a loan.

Understand the above concept through a graph;

Amount of medical Insurance requirement graph

If you have millions of investments then there is no need to take medical insurance. You can pay all the medical bills from your investments for yourself, your children and other family members.

But, what if your monthly income is Rs. 1 Lakh and the expenses (Avoidable + Unavoidable) are Rs. 85,000?

You are savings only Rs. 15,000 every month and if you are investing that money consistently for the last 3 years then you would have the capacity to pay Rs. 5 Lakh medical bill from your pocket.

The thumb rule is

Take a bigger medical insurance cover when you have fewer investments and dependency on a single source of income.

As your investment grows you can reduce your medical insurance amount because now you have an extra source of income that can take care of your hospital bills.

Insurance cover of Rs. 15 to 20 Lakh is sufficient to cover the hospitalization expenses of 2 adults and 2 children in case of any medical emergency.

The annual premium gonna cost you around Rs. 20,000 if you are in the healthy 30 years age group.

Note: The medical insurance provided by your employer may not be sufficient to cover your hospital bills.

Your employer gives you medical insurance till the time you are on the payroll, the moment you leave the company the medical insurance benefits also cease for you and your family.

It may also be possible that the company can get shut down due to business ups & downs or other external factors like what happened with JetAirways.

In such an event, suddenly you find yourself in a vulnerable situation where you and your family members are without any medical insurance.

In case you take a new insurance policy, then You would need to wait for pre-existing disease up to 4 years.

Insurance for Parents

The medical insurance premium for parents (seniors) costs more because they are old and more vulnerable to disease. Heart care or dialysis care at a good hospital can come to Rs. 15 Lakh to 20 Lakh.

Taking an inadequate insurance cover even if that means paying an extra premium.

Tips to Pick the Good Medical Insurance

Tip #1

Select a medical insurance plan that gives you the flexibility to add new family members without losing the plan benefits.

Tip #2

Look for medical insurance with a lifetime renewability option so that you can continue with the plan for your entire life.

Tip #3

Pick medical insurance that has a 10% or less co-payment option. Insurance with a co-payment option has a slightly lower premium.

Tip #4

Check the waiting period to cover pre-existing illness. The lower the waiting period the earlier you get the insurance benefits.

Special Offer

Care health insurance (Religare) offers a special plan which offers coverage of Rs 1 crore at a premium of regular plans.

For example – If you are 30 years of age, healthy, and non-smoker, you can get 1 crore health cover by paying a premium of Rs. 13,500 per year (same premium for 15 lakh coverage policy)

Check premium quote for your health insurance

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