Discussion: Saving for your own healthcare Vs Health insurance?
First, Health Insurance is complicated, even financial advisors, pros find it difficult to understand. Couple this with the recent price hikes in health insurance. This has forced people to rethink whether health insurance will even work for us in the long run, and is saving for your own healthcare fund a better bet?
What is your view on this? Do you think one should gradually derisk from health insurance and invest in other options or do you think - health insurance is the only option? Let us know your views?
Speaking purely from personal experience - I've had a very complex experience with health insurance (especially while getting claims).
The agent didn't exactly educate us about the product - the insurer did not provide seamless support. And until recently, we didn't know we were eligible for getting hospital cash for several days if admission - something we never claimed so far. And no one bothered to tell us about the option - including the agent. (And we didn't bother to read the document properly either)
Having said that - my mum's gone through multiple hospitalisations over the years for a condition that no one could have predicted (not hereditary in the family, and not as a result of lifestyle/ habits) - and we could easily have exhausted our entire bank account - if she'd not bought a policy early on. In the end, we got the claim amount - so we're okay.
So - I would invest in a policy despite expecting poor experience. It's not an ideal situation, but there's no option right now - so that's a compromise I'm willing to make.
My experience:I am having a group health insurance policy from New India Assurance(for citibank customers) for past 17 years. 2 years back, i have included my sister and brother in law also as members.The same year, my brother in law got kidney infection and admitted twice in hospital at Kochi. In both cases cashless treatment received. Experience was smooth. i also have personal policy with CARE health insurance. Not claimed so far.
Opinion: Health insurance is a must . Medical inflation is almost three times of retail inflation. Pandemic may come in future also. It is observed that premium is increasing sharply after 65 years. In olden age, as long as premium is about 10-15 % of sum Insured, it is affordable. any way recommends for Health Insurance
I have health insurance for the last 12 years where the sum insured is 10L. The premium payable has now gone to around 35K per month. If we look at the average premium of the same amount (at the start my premium was sub-20k & I expect it to go to 50K+ in the next few years), in 20 years I would be paying around 7L as premium for a Sum Insured of 10L. If I don't fall sick, get hospitalised & claim 10L in around 20-25 years, the premium I have paid would not provide any return per se. The conventional logic then says why not invest it into a fund & get decent returns. But then what if you fall sick & have major hospitalisation in the first 5 years? These scenarios (i haven't done any detailed analysis of the cost of money, inflation, compounding effect etc) are pretty complex to even think & hence I have figured out a three-pronged solution that's as follows:
- have a health insurance policy of 10L with a super top-up of 15 lakhs thus making my family's insurance cover as 25L.
- on top of this, I started investing around 10K per month as a health fund around 5 years back (invested in the liquid fund for quick redemption) which I increase by 2K per year (now it's 22K per month). This corpus is to be purely used for health expenses. If by god's grace, no major illness hits me (or my family members) before I die, this fund would be my wealth creation for my kids. I am really not looking at returns on this money as well as thinking about difficult questions like whether I am beating inflation etc. I am just saving enough for any untoward health calamity of me or my family member.
- Preventive care is my real protection against any lifestyle diseases. No Tobacco, No Excessive Drinking, No Drunken Driving, Daily exercise (at least 7-8 km brisk walk) and eating everything in moderation.
I think there can not be a single solution for a complex issue like healthcare & hence, a combination of protective measures would give you better coverage.
I would be happy to receive any different thought processes that can help mitigate these risks better.
Health insurance companies, TPAs, or some-startups have to uplevel the customer-satisfaction-game when a customer raises a claim. Currently, claims do get settled, but after lots of hassles for retail customers. Some of my personal experiences are listed here. Corporate group insurance experience is superb, though. I will like retail-customer-claim-experience to reach the corporate-group-insurance level.
From a 10000-feet-level perspective, the real need is to free the medical-industry from its licensing and command-control shackles. We have to get more free-market-approach in our current medical system. Some of my thoughts captured at http://oshantomon.blogspot.com/2013/11/coping-with-rising-medical-costs-in.html