What Are The Benefits Of Taking Health Insurance At A Younger Age?
Being young means seeing every day as a new experience. It means feeling passionate and interested in things. It means having the freedom to dream and good health to chase those dreams. To walk barefoot across the grass, touch the sand, and explore all that life has to offer. And while you have a lot of goals to achieve while young, buying Health Insurance might not be one of them.
1️⃣ Health insurance premiums aren’t set like term insurance
In term insurance, the premiums are set for life. But that is not the case for health insurance. Here, the premiums increase with age; the older you are, the more expensive your policy will be.
2️⃣ Your employer covers you while you’re young, so when older, you can port
An employer policy seems like a boon - with lesser/no premiums and smaller amounts of paperwork. So why invest in health insurance yourself when somebody else is providing it to you? Also, since portability (i.e. a process through which you can transfer your current health insurance plan to another insurer) is available, you can switch to a personal plan later in life if you want to.
But these arguments aren’t enough, TBH. Why? Let’s find out, in this article!
👉 When you leave the company, you lose your employer’s coverage
Sometimes, leaving your job isn’t a choice that’s under your control. If there is an economic recession, you could be forced to leave your job. Or if you want to start something new, build your own business, you’d have to quit. No matter what the situation is, your employer health insurance plan is tied to your employment. It will be discontinued as soon as you move out of the company.
But can you not port the policy to a personal health plan later in life? The answer’s in the next point!
👉 Portability has its own caveats
Portability is a process through which you can transfer your current health insurance policy to another insurance provider of your choice. You may think that if you leave the company, you will port the employer policy to a personal policy later in life. But remember that it is at the discretion of the insurer to approve or decline the proposal for portability. With age, there’s a higher potential of contracting more diseases/conditions, and it may become more likely that you raise a claim. And insurers have been known to decline portability requests for people with any previous claims or medical history, especially those related to senior citizens.
👉 Premiums can change if there's a health condition
Health Insurance might feel like an unnecessary investment when you’re young and healthy, as you wouldn’t really make claims. However, insurance companies will offer a policy at a lower price if the risk you face is lower - and this is true when you are young. So, if you buy it later in life, when you are more likely to contract an illness or disease, the cost will increase even further, which can be affected even more by rising healthcare inflation.
👉 You’ll get comprehensive coverage
At the time of policy purchase, insurers evaluate your health history. Once the evaluation is complete, the policy terms remain constant throughout the policy period. There is no change to the plan based on claims or medical conditions diagnosed post-purchase if you renew it.
When you’re young, you have a lower susceptibility to illnesses and other ailments. Hence, insurance companies will offer you a wider, more comprehensive plan. As soon as you have a disease or a health condition, your chances of getting a comprehensive cover reduce drastically.
Another point to note here is that - insurers consider young people with a chronic lifestyle disease as a higher risk than someone who is, say, 50 and has recently been diagnosed with the same. Age-induced diseases are considered natural, compared to lifestyle-induced health conditions, like - stroke, diabetes, hypertension, lung cancer - caused at a young age.
On the other hand, not everyone suffers lifestyle diseases at an early age, but they can get hospitalised for infectious diseases, such as - dengue, malaria, hepatitis - or for accident-related injuries. So, buying the policy early and not taking the risk of rejection later is crucial.
For example, Dhiraj, 26 years old, did not purchase a comprehensive health plan when he was fit and healthy. Six years later, at 32, he gets diagnosed with diabetes and wishes to apply for the same comprehensive policy.
In this situation, the chances of Dhiraj receiving the same plan offered to him - when he was still young and healthy - are much less. So he may have to either -
➡️ Pay an additional premium (called loading), or
➡️ Buy a substandard plan with limits and conditions, or
➡️ Face proposal rejections.
Let's compare the features offered by a comprehensive plan and one offered to people with lifestyle diseases:
|Features of Comprehensive Plan||Features of plans offered to people with a lifestyle disease|
|The core coverage is broader. You won’t have to face any room rent limits and there will be very less deductions. All treatments will typically be covered up to the sum insured you choose.||The core coverage is narrow. You may have to face room rent limits, financial limits on medical treatments, and even have to share costs (copayment) with the insurance company, etc.|
👉 Serve all the mandatory waiting periods before getting old
A waiting period is a duration - after policy purchase - during which you cannot make any claims even if you have a medical emergency. Until this period is served, the insurer doesn’t cover you for any expenses related to the hospitalisation of certain diseases, specific surgeries, pre-existing illnesses, and special treatments as mentioned in their policy wording. You will have to foot the expenses yourself.
A general list of Waiting Periods -
|Initial Waiting Period||30 days from the date of policy issue|
|Pre-existing conditions (i.e. diseases which you’ve had in the 48 months before purchasing a policy)||1-4 years|
|Specific illness/procedures (these are determined by the insurer and are not dependent on your present-day health)||1 - 4 years|
Hence, if you buy a health insurance plan at a young age, the waiting period of the policy completes before you get old. And you can avail the benefits and raise claims at the time of need.
👉 No pre-policy medical check-ups needed
Before issuing a policy, most insurance companies require people above a certain age (45 years, 50 years, 65 years, etc.) to undergo a health check-up. Therefore, before approving your application, your insurer will have to make sure that you are not a risky individual to cover. But if you buy health insurance at a younger age, and have no underlying illness or lifestyle condition, you don’t have to undergo a pre-policy medical check-up and can get a smooth policy approval.
Please note that the criteria for these pre-policy tests can vary across insurance companies. Some may require people of all ages to undergo them, some may impose the tests based on the sum insured you pick and/or the location, they may even be relaxed from time to time. The type of tests you’re asked to undergo can also differ based on your age, sum insured, plan, etc.
👉 Avail the most out of No Claim Bonus (NCB)
This is a reward given to you for every year you go without filing any health insurance claims. NCB is provided in 2 ways. Either by increasing the sum insured for the same current premium or by reducing your premium by some percentage.
The insurer offers the reward because you stayed healthy throughout the policy period and didn't raise any claims. And when you’re young, the chances of you filing claims are lower. So with every renewal of a claim-free year, you will earn a No Claim Bonus. And with all the NCB accrued over the years, you can either enjoy an increased cover or pay less premiums in the later years.
Please note that this bonus comes with certain terms and conditions you should know about.
👉 Claim income tax benefits
Under Section 80D of the Income Tax Act of 1961, you can claim income tax deductions on the annual premium of a health insurance policy that you’ve purchased. So the sooner you buy a health insurance plan, the more time you get to enjoy this benefit.
Healthcare costs are off the charts due to inflation. A health insurance plan that may seem unnecessary today, will be your saviour in the future. It is, thus, wise to buy the policy while you are still young and healthy - get a more comprehensive coverage, and stay truly protected at the time of need.
Planning to buy Health Insurance? Reach out to vetted financial experts for a free 1-to-1 consultation to make the right choice! :)
- Buying health insurance is a necessity even when you are fit and healthy.
- The premiums can change with health conditions.
- Your employer policy will not cover you if you leave the company. And porting it to a personal policy later can be a big hassle, and the proposal might even get rejected.
- When you are young, you are offered the best, most comprehensive health insurance plans.
- You can buy a policy early in life, complete all the waiting periods, and avail the policy benefits at the time of need.
- When young, you don't need to undergo any medical check-ups before buying the policy, unless you suffer from any underlying illness or lifestyle disease.
- You can also accumulate the No Claim Bonus over the years and enjoy an increased cover or reduced premiums later in life.
- Enjoy the income tax benefits for a longer period of time, by purchasing the health insurance plan at a younger age.
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