No. You don’t need to buy Health Insurance.
- EXCUSE ONE: I have my employer health insurance
- EXCUSE TWO: I’d rather build a healthcare fund
- EXCUSE THREE: Not sure health insurance is worth it. I’ll buy it next year when it becomes cheaper
- The best time to buy health insurance is…
Now that we got your attention, let’s get to the actual reason we are writing this article.
We have written several pieces in the past, talking about the importance of health insurance to ensure your family gets quality medical care, should a need arise; while you do not exhaust your entire life’s savings to pay the hospital. But - there is now an urgent need to refresh your memory. And this could possibly be our last chance to convince you to get a good health insurance cover - before an impending disaster strikes. If you’ve been following the news on Covid - you would have heard.
A third, much more serious wave is right around the corner. In fact, Dr. V. K. Paul of NITI Aayog recently said that Covid vulnerability might increase in October-November, and these months would be crucial for India's fight against Covid. And for families, while this indicates a strong need to stay home, and take every precaution to keep themselves safe - it is equally important to be prepared to face the other side of the impact. The financial side.
And, every single time we speak to people about urgently buying adequate health insurance, here are some of the excuses they come up with for why they don’t buy health insurance.
And - why they’re no good!
There are still a lot of individuals who are relying on their corporate/employer health insurance plan to help them tackle any Covid (or non-Covid) hospitalization they might go through. There are a few points one must remember while making this assumption.
- You lose this cover as soon as you’re out of the job: The job market has been fluctuating dramatically over the last two years. There are really no guarantees on which job stays, and which goes. And if unfortunately, you lose your job - this will mean your entire family will be without a healthcare cover.
- These are not customized to your family’s medical needs: Your employer’s health plan is designed to fit your company’s budget and not particularly your family’s needs. This means that you’ll have no control over the terms & conditions. Further, seeing how quickly hospitalization costs are increasing, it is likely that the features and benefits offered in your plan are drastically reduced to fit the budget - and you’ll not even realize it!
The only situation in which it’s okay to rely on employer health insurance is if you have family members with preexisting conditions, who are in the waiting period for the personal policy. Since most employer covers offer day-one covers, these could be used as a stop-gap arrangement, while you wait for your personal health insurance to open up.
We can’t emphasize this enough. A healthcare fund is not a substitute for health insurance. Here are some points to remember while you’re ignoring health insurance because you have (or are building) a healthcare fund.
- The healthcare fund will get exhausted: Yes. If you undergo a single large hospitalization that takes up all your fund - you will be left with no money to pay for your (or your family’s) next medical care. As an alternative, when you buy health insurance - the amount accessible to you gets replenished every year. So, even if you use up the full sum insured in a year, come next year - you’ll have access to the full sum insured again.
- How much healthcare fund is enough - is still a mystery: When you decide to build a healthcare fund, you think not for expenses that can occur in one year. But over a lifetime. In fact, as you grow older - it becomes more likely that you’ll get hospitalized - and will incur larger bills. To top all this, healthcare inflation is far higher (and unpredictable) than retail inflation - meaning, there is really no way to know how much money will be enough to cover for hospitalizations 15, 20, or 30 years from now. So, how much funds will you accumulate?
So, it is clear that a healthcare fund is not an alternative to health insurance.
Having said that, you should still invest in a healthcare fund to supplement your health insurance, as there will always be a small part of your bill that will not be paid for, by your insurance plan. A decent healthcare fund can support those expenses, ensuring your savings and investments remain untouched.
There are many reasons why this plan will fail.
- Health insurance is only going to get more expensive: Yep. You heard it. This year and a half have been super hard on insurance companies, as a lot of them had to pay out more in claims than they collected in premiums. It will take them a few years to make up for these losses - and that means, costs will only increase (and there’s no way, they’ll decrease!). In fact, we wouldn’t be surprised if the costs increase like never before over the next 1-2 years.
- One diagnosis, and getting health insurance will become very difficult for you: Right now, insurers are trying hard to cut their losses, and play very safe. Right now, it is super important for them to increase their pool of healthy individuals (young, no existing conditions, less likely to make a claim) while restricting individuals with medical conditions who are more likely to make a claim. So, if by an unfortunate turn of events - you are diagnosed with a medical condition - it will impact your chances of getting health insurance. Either the premiums would be heavily spiked, or your policy can get rejected altogether.
- One Covid positive diagnosis could ruin your chances of ever getting health insurance: Right now, there is no clear data on the long-term effects of a Covid infection. As a result, insurers are unable to gauge the risk they would be covering while providing health insurance to individuals who had a Covid positive history. They are treading with the utmost caution and avoiding providing covers as the actual risk remains unknown.
Honestly, the best time to buy health insurance was actually a couple of years ago. When we did not have Covid looming over us, with insurers worried about the long-term consequences of the pandemic on their bottom line. If you guys bought adequate health insurance for your entire family in the long term - you are absolutely sorted.
Having said that - the second-best time is right now.
- If you haven’t yet, invest in a good health insurance policy, covering your entire family today.
- Ensure you have a cover that will be sufficient for the next 20-30 years, (considering healthcare inflation of 5-8%)
- If you have health insurance, but of a low sum insured - consider upgrading to the highest cover you can afford right now.
- Build a healthcare fund on the side, to cover additional expenses that health insurance will not pay for
The thing with health insurance is that you should buy it when you don’t need it yet. Once, you fall sick, get injured, or undergo a hospitalization - it will become very difficult for you to get a good cover, at an affordable price. And, if you don’t buy a policy right now, you’ll end up paying for all your healthcare needs from your pocket. And, that will mean you lose your savings and assets - just because you wouldn’t make a decision on time.
Remember - If you ignore health insurance now because you’re healthy - health insurance will ignore you, once you fall sick!
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- Covid vulnerability might increase in October-November and we could get hit by the third wave of Covid anytime now. It is time to move over any excuses we’ve been making to avoid buying health insurance - and investing in a plan urgently.
- One of the top excuses people make is that they already have employer insurance, and don’t need a personal plan. A corporate policy might seem like a good option, but you can’t customize it to fit your needs or have control over the policy terms and negotiations. A personal plan is a must.
- Another common excuse is that they’d rather invest in a healthcare fund. While a healthcare fund is good to have, it is not an alternative to health insurance. It will not be sufficient to secure your family's healthcare in the short or long term.
- There are some people who delay health insurance purchases because they think they might get it at a lower cost later. This couldn’t be farther from the truth. Health insurance is only getting expensive with time, and if they get a disease, it would become very difficult to get a policy.
- To ensure that you have an adequate sum insured, and full control over the policy customizations, you must invest in a personal health insurance plan for your entire family. So, if you haven’t already, buy adequate health insurance cover - right now!
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