The Importance Of Health Insurance For Financial Stability

Without health insurance or sufficient funds for medical treatment, you may avoid seeking medical care even when it’s urgently needed. The saying “a stitch in time saves nine” is particularly relevant in medical emergencies.

Financial Risks of Medical Emergencies

In a crisis, it’s hard to think rationally, leading to financial decisions that could have long-term consequences. Borrowing money through personal loans, credit cards, unscrupulous lenders, or even relatives can jeopardize your financial future if you fail to repay on time. This can damage your credit score, affecting your ability to secure future loans, such as home or car loans, and lowering your overall quality of life.

Preventive Health Care

Preventive health care, often covered by insurance through free annual checkups, helps detect health issues early, making them easier to treat. This proactive approach can prevent minor issues from becoming major, costly problems.

Rising Medical Expenses

Healthcare costs in India are rising much faster than salary increments or general inflation. Procedures like cardiac bypass surgery, total knee replacements, or stroke treatments can severely disrupt your financial plans, setting you back years.

Reliance on Savings

Without adequate health coverage, you may need to rely on your savings to fund medical treatments. In dire situations, this might mean depleting your savings and selling investments or assets. Many people turn to friends, family, or even crowdfunding platforms for financial assistance.

Emergency Funds

It’s crucial to have an emergency fund and a medical expenses fund. Adequate health coverage reduces the financial risk until you can save enough to cover medical treatments independently.

Cashless Claims

Cashless claims are often approved within two hours of hospital admission. However, if there are documentation issues, usually on the hospital’s part, you might need to pay out of pocket and claim reimbursement later. Having a medical expenses fund ready for such emergencies is essential.

Non-Medical Expenses

Not all items on a hospital bill are considered medically necessary and reimbursable by insurance. Plan to cover about 10% of the total bill for non-medical expenses like refreshments for an accompanying person, visitor ID cards, and certain consumables.

Financial Benefits of Health Insurance

Health insurance mitigates the financial burden of hospitalization and medical expenses. Some plans also cover outpatient (OPD) expenses, ambulance costs, pre and post-hospitalization expenses, and alternative treatments like AYUSH.

Risk Distribution

Health insurance companies distribute the risk of medical expenses among a large pool of insured individuals. This shared risk results in a beneficial situation for both the insured and the insurance company.

Tax Benefits

Under Section 80D of the Income Tax Act of 1961, you can claim a tax deduction for health insurance premiums up to ₹25,000 per year. An additional deduction of up to ₹25,000 is available for parents, or up to ₹50,000 if they are senior citizens. This makes investing in health insurance a financially sound decision.

Your Responsibility

As an insured person, you need to determine the coverage amount based on the average costs of common procedures at your preferred hospital. Contact the hospital to understand these costs before purchasing a policy to ensure adequate coverage.

Network Hospitals

Check if your chosen hospital is part of the insurer’s network. Most reputable hospitals have tie-ups with multiple insurers, simplifying the claims process.

Conclusion

Health insurance is a complex product tailored to individual medical needs and history. It’s important to have the right guidance when choosing a policy. Contact us if you need assistance in selecting the best health insurance plan for your needs.