Why medical insurance is a must

Health is wealth. That's old wisdom. We do not know if it is true in today's world. What we do know is that the corollary holds. For, if you lose your health, your treatment can be a major drain on your resources and leave them severely crippled.

And, given that healthcare costs are rising at more than 15 per cent a year, you should try to guard against such a hit. "It should no longer be a choice, but a necessity in view of the escalating cost of medical treatment," says Antony Jacob, managing director, Royal Sundaram Insurance Company.

Says Shreeraj Deshpande, assistant vice-president (health insurance), Bajaj Allianz General Insurance: "With increasingly stressful lifestyles, even the young are prone to illnesses such as heart attacks. Health insurance provides adequate protection during medical exigencies." A Kolkata-based businessman, Pabitra Das, 56, understood the utility of the cover and got one early in his life.

Better safe than sorry: Das took his first medical insurance from Calcutta Hospital and Nursing Home Benefits Association in 1977. It turned out to be one of his most prudent moves.

In the past 29 years, all major medical costs for his family -- mother, wife and two children -- have been covered. For a current premium of just Rs 12,000 a year, Das has been able to cover hospitalisation costs of up to Rs 50,000 each time in two consecutive years.

What's on offer: In India, general insurance companies sell stand-alone health policies though life insurance companies are beginning to offer these too. In the past, they covered hospitalisation costs, but now private insurers offer products that also pay pre- and post-hospitalisation expenses. Some policies, like Health First from Tata AIG Life, pay a fixed amount for every day of the hospitalisation, apart from the medical expenses.

These policies have become much more convenient than in the past with the advent of cashless settlements. Also, large hospital chains now have tie-ups with companies which help policy-holders get free outpatient visits to the consultants in their hospitals, besides cashless claims like Max Healthcare's tie-up with United India Insurance.

You can also get cover for critical illness under riders that come with life covers from life insurance companies. They provide up to 30 per cent of the sum assured for illnesses such as renal failure, stroke, paralysis and heart attack. Unlike general insurance policies, where treatment has to be in specified hospitals, for critical illness riders, you can get treated anywhere in the world.

Define your needs: Given the variety of offerings, it is wise to first define your needs. One way of doing that is to identify medical emergencies that could hit you hard financially.

Examine policy benefits and coverage: It is important for you to realise that not all medical expenses are covered by the products available. For instance, many policies from general insurers don't cover dental procedures, non-surgical care, or consultation.

The cover is also available till a certain age, for instance, age 80, for Mediclaim policy by PSU insurers. You should also know that critical illness riders that come with a life cover cease to exist, once used.

Determine your affordability: After you have figured out the product that will give you the best possible cover and benefits, you will have to get a fix on the premium that you can afford. Health covers from general insurers and critical illness riders from life insurance companies are entitled to tax deductions under Section 80D. Depending on your pocket, take the widest coverage possible.

Be an early bird: It pays to start early when it comes to buying health insurance. If you procrastinate, diseases surface later in life and remain out of policy coverage due to the existence of the clause of pre-existing diseases. Of course, lately there have been products where pre-existing diseases are being covered but that is subject to specific conditions.

You also get the benefit of no-claims bonus if you don't make claims, and that adds to 15 per cent of the coverage every claim-free year. You also need to keep in mind that general insurers show reluctance to insure anyone aged 45 years or older since such people are more prone to health risks.

Get cover: Even if your employer offers a perk of medical insurance, get your own cover. A change of job could leave you without healh insurance, as could retirement. Getting fresh cover after 45 is difficult.

As the longevity of the average Indian goes up, health expenses of families would mount. That is why you can expect the role of health covers in our lives to increase. We'll modify the old adage. Health cover is wealth.

Tax kick: Deduction under Sec. 80D up to Rs 10,000; Rs 15,000 for individuals aged 65 or more.

Smart tip:  Get your own mediclaim even if your company offers one. Change of jobs or retirement could leave you without a cover. Also, after 40 years of age medical tests become essential.