Ideal Health Insurance Cover
I am 24 years old working in Mumbai (permanent resident of a town in Madhya Pradesh). I am researching on health insurance for quite some time. During my research, I came across Care health insurance - Care Advantage Plan that offers health cover of Rs.1 crore at a premium of around Rs. 12,500/-. Star Health through its Young star policy also offers the same cover at Rs. 14,000/- approx. I want to know whether I should go for 1 crore cover or less? What will be the ideal health insurance cover?
Further, whether the two mentioned companies are good to go or should I look for any other company (if you can suggest).
Also, could you please share any eBook or any comprehensive content on what to look for when buying a Health Insurance?
- You need to buy a coverage for your needs when you hit 50. The ideal health insurance coverage in our view is hence the ideal cover for today factored for around 8% inflation till you hit 50. If you take 5 Lakhs as the adequate cover today, and do the math the number you would get is around 30 Lakhs in 20 years.
- 1 crore policies are attractively priced today since you are unlikely to use this entire cover today or in the next few decades. Such attractively priced products are likely to see multiple price revisions and may not remain as affordable as they are today - forever, especially when you need it in your old age.
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- We are in the process of writing content on Health Insurance.
Thanks for your prompt reply !
On 2nd point of your answer - So this means that if I take 25 lacs or 50 lacs cover of the same product (say Care advantage), premium for these coverage amount will also undergo multiple price revisions in the future, since the product is same ?
When you say 1 crore policies are attractively priced today, are you talking about policies with a base cover of 1 crore or policies with Base + Super top-up cover of 1 crore?
Why premiums are likely to rise faster for the 1 Crore cover:
In my view, the premiums for the 1 Crore cover are significantly discounted (compared to lower coverage like 25L/30L) given low utilization (average claims divided by average cover) today. Given past experience, the premium for the 1 Crore cover will see frequent hikes, catchup in a decade or so - once you get older, and as the utilization increases.
Why 1 Crore cover could be useful:
On the other hand I am also conscious of the fact (looking at the shocking hospital bills for COVID19 treatment, especially for senior citizens and people with chronic diseases) that it is difficult to predict the healthcare costs of the distant future. All we can do is add up inflation and estimate the coverage we will need.
We live in crazy times, and no one really can say with guarantee whether a 25L or 30L cover will be adequate in the future, say in 2050! Keeping this in mind, and that upgrades in the future can be difficult, the alternative approach is to buy the highest cover you can afford!
Confused? Here's a step-by-step approach:
- Compare the premium of 1 Crore cover and 25/30 Lakhs cover. Further compare the premium of 1 Crore cover with a combo of 10L base policy and 15 Lakh Super top-up. If you find the difference in costs for the 1 Crore policy with the other two options to be affordable today - then you can go for the 1 Crore cover. If the difference is material - then stick to a 25 to 30 L cover - keep reviewing your cover every few years of renewal.
- If you go for the 1 Crore cover and in the future you see a significant rise in the premium for 1 Crore cover making it unaffordable, you can always downgrade your cover to 25L/30L (the actual cover you need).
- This way you have an affordable ultra high coverage for your family - that keeps your healthcare expenditure inflation proof on one side, with the option of easy downgrading on the other - it is easy to downgrade a health insurance cover - very difficult to upgrade once you hit old age (above 50/55)
Suppose we take a 1 crore cover, would the premiums rise for us as well over time?
If yes, then what's the advantage for someone who has taken a 1 crore cover Vs someone who has only taken a cover for 25 or 50 Lacs?
Also, would it be a good idea to take two different policies of 50lacs each vs 1 policy of 1 crores?
Yes, premiums for all health insurance plans will rise largely due to healthcare inflation and an aging population covered under the health insurance portfolio of your insurance company.
When you take a 1 Crore cover, you have the option to downgrade to a lower cover in case it becomes unaffordable in older age. The chances of an upgrade are lower at higher ages.
Given a choice, have only one good health insurance plan - does not make sense dividing the cover into multiple policies - unless it helps in a certain way - like if it helps save money.
Also unless you are making a combo with Super Topup, buying two regular health insurance plans of 50L each will be unnecessarily expensive than buying a 1 Crore plan.
I am 24 years old and I am going for a 25-30 lacs cover and thinking to increase the sum insured when I will be 30-35 years old. This way it is affordable at present and when income will increase, I will increase my cover. Further, as you said it will be difficult to upgrade once you hit 50-55 years of age, so I will increase the sum insured at the age of 30-35 years. Is there any issue in this approach?
I am going for star health comprehensive plan.
There is a difference of approx. 4700/- in premium for 25 lacs cover vs 10 lacs cover + 15 lacs Super Surplus Gold plan (Defined limit of 10,00,000/-). Further, if I take the defined limit of 300,000/-, the difference is 3400/-. Which is better - full comprehensive or comprehensive + super surplus ?
If opted for comprehensive + super surplus, which is better – lower defined limit or higher defined limit?
Following is the premium comparison:
a) 25 Lacs - 18,013/-
b) 10 Lacs + 15 Lacs top-up (Defined limit 10L) - 13,369/-
c) 10 Lacs + 15 Lacs top-up (Defined limit 3L) - 14,632/-
Thanks a lot in advance !!!