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Get Health Insurance Or Go Broke Later

Monday, July 27, 2015
By Mukesh Kumar

Mukesh Kumar Executive Director, HDFC ERGO General Insurance.

A World Bank analysis of financing of hospitalization shows that a large proportion of people in India still borrow money or sell assets to pay for hospitalization. So the choice is between getting health insurance or getting financially ruined

Even after three decades of its introduction, the Health Insurance penetration level in India is low compared to our western counterparts. Estimates suggest that only 11-13% of population is presently covered under some kind of Health Insurance. This means that a majority of population is still not covered under Health Insurance, which is alarming. A World Bank analysis of financing of hospitalization shows that large proportion of people in India still borrows money or sells assets to pay for hospitalization. And a majority of Indians are vulnerable to major ailments.

One of many reasons of low Health Insurance penetration in India is indifference of people – especially the young generation – about Health Insurance as a protection product. Most people do not realize the importance of a Health Insurance policy in their overall financial planning. Some people have the mistaken perception taking a Health Insurance policy is taken only when they are of ill health or are aging in a non-healthy way. Some people seem to believe that Health Insurance policy is only for elderly people and they use their existing good health as an excuse for not considering a Health Insurance.

However, this perception is just that – a perception. The reality of today’s life is that contracting an illness or getting involved in an accident can happen to anyone, any time, irrespective of one’s age. Illnesses, accidents and consequent hospitalization can cause a lot of distress in the lives of individuals and their loved ones. As a result of such unexpected events, one may end up with staggering hospital bills for life saving treatments. The best way to protect yourself and your loved ones from any kind of financial hardship is to take advantage of the benefits offered by a Health Insurance policy.

Health Insurance policies offer a number of features that are beneficial to the policyholders’ physical and financial health. From a legal point of view, a Health Insurance policy is a contract whereby the insurer agrees to offer sufficient and fair reimbursement to the insured, and in some cases, a cashless treatment, in the event of the policyholder getting hospitalized for an unexpected medical condition. The reimbursement from the Health Insurance policy helps individuals and families in dealing with the financial adversity as it covers around 90-100% medical and hospitalization expenses.

To make it easy for the policyholders to understand, insurers are required by the regulator to provide the consumer with a complete list of 'expenses', which are clearly defined in the insurance policies. In most cases, a standard Health Insurance policy covers all relevant expenses ranging from diagnosis of the illness to its complete treatment. It even covers the expenses incurred for surgeries and all medications including other medical aid used during the treatment. Amid uncertainty about possibility of getting hospitalized and rising medical costs, not having a Health Insurance policy can be risky.

There are compelling reasons why having a Health Insurance policy is essential for everyone.

  • With changing lifestyles, health-related uncertainties have been growing. It is not unusual to hear about young individuals falling victims to lifestyle ailments like heart attack or stroke. Also, despite better automotive technologies, there is no decline in road accidents. In fact, instances of accidents caused due to technologies have gone up. A Health Insurance offers much-needed financial support during such difficult times.
  • Medical inflation is estimated to be in double digits since the last one decade or so. This is prompting individuals to consider a financial backup by way of Health Insurance plans. There are many variants of Health Insurance – Individual plans, Family Floaters and Critical Illness Insurances – are available in the market to suit requirements of individuals and families.
  • While having a financial protection against a medical emergency is good, nobody desires for an incidence of hospitalization. In fact, many individuals develop cold feet after a two-three claim-free years. But there is an additional advantage attached to the Health Insurance policy. It serves dual purpose. While offering financial protection in event of hospitalization, Health Insurance policies also offer advantage of tax benefits. The Section 80D of the Income Tax Act provides for tax deduction from total taxable income for a payment of Health Insurance premium paid by an individual (or a HUF).

If you are looking to get benefits of a Health Insurance policy, it is important that you abide by the stipulated terms and conditions. It must be noted that a Health Insurance policy does not cover any pre-existing medical condition. Every Health Insurance policy has a pre-decided (by the insured and the insurer) Sum Assured, which is the maximum amount that is paid to the policyholder in the event of a hospitalization. Medical / hospitalization expenses exceeding the Sum Assured are not reimbursed. Undergoing medical treatment at any random hospital does not entitle one to claim for reimbursement. As per the regulations, the treatment must be taken from a hospital or medical facility that is accredited by the insurance provider.

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