How much health insurance cover should you buy?

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how much health insurance should i buy

How much health insurance cover should I buy? What is the adequate health insurance cover one should have? Should I go with individual policy or family floater? Do I need to top it up with personal accident policy and critical illness plan also or just buying  higher sum assured in mediclaim would be enough. All this and many more questions naturally come up in mind of person who gets convinced to buy health insurance policy. I used the word convinced because there are many people who still believe that buying health insurance is waste of money or are dependent on their employer’s provided cover.  I will try to answer all the above mentioned queries through different posts but today I will be covering the first one i.e. “How much health Insurance should anyone have”?

Actually there’s no thumb rule which says how much health insurance coverage is good enough but yes there are some considerations which will help you in selecting adequate coverage. The coverage that you buy should be enough to ensure that if you (or a covered family member) get sick or injured you are not footing the entire medical bill on your own.  Consider the following parameters before selecting medical cover.

1.       City you live in:

You will agree with me that the cost of treatment in metro cities is around 25-30% higher than same treatment cost in non-metro cities. So depending on the city you live in you may choose your health insurance cover.  But do consider the situation when patients get referred to metro cities as small cities does not have quality medical facilities. Out of my personal experience, I feel that for a young (Under 30) healthy person Rs 3 lakh cover would be bare minimum in non-metro and Rs 5 lakh cover in metro. And here I am talking of Individual plans and not family floater.

2.       Your age bracket:

 If you see the rate card of health insurance policies, you will find that different age groups have different premium rates. This is because the probability of falling ill is less in young age and same increases with age. So should be your strategy. You should start with a base cover in the young age and keep on increasing the cover as and when your premium bracket increases. Though if you don’t make claim in the first 5 years, then automatically your cover will get increased by 50% through no claim bonuses, so you may discount this increases in your calculation and increase your health insurance coverage accordingly. It doesn’t make sense for a son (30) and father (55) to have a same health insurance cover.

3.       Family and Personal health history:

If there’s a family history of any illness than you should also prepare yourself for the same by getting enough health insurance and increasing it time by time. This is because once you also get diagnose with the same illness than it would be difficult for you to increase your existing coverage or buy a separate cover. This is one of the reason we advise corporate employees to have separate cover along with the employer provided cover. Keep getting your annual health check done and also keep watch on your health insurance cover. (Read : Corporate employees- don’t ignore health insurance)

4.       Lifestyle:

Your lifestyle also guides your quantum of health insurance coverage. The kind of lifestyle we live automatically make us prone to many diseases. Stress has become a part of life, working hours don’t let anyone to exercise or have healthy food. Some use innovative excuses for their sedentary lifestyle. Many are habitual to smoking and boozing. No point for guessing the state of health after few years. Even if there’s no family history, still we are prone to many lifestyle diseases like diabetes, hypertension, high cholesterol etc.  Of course you can delay or avoid all these by improving your lifestyle, but also be ready for the worst…keep on increasing your health insurance cover.

5.       Affordability:

Many people avoid high health insurance cover just by giving excuse that premium is high and not affordable. I don’t agree with that reason. I always believe that affordability is a subjective term. When you have control on your cash flows, than you can very well afford the health insurance premium amount. Having 2 pizza parties every month costs around Rs 1500/- which means Rs 18000/- a year, Going out for movie every week with family in multiplex easily cost Rs 700-Rs1000 per week which means Rs 35000 – Rs 48000 a year, those who smoke and booze can calculate how much they spend on all these …. These are only few examples…you can figure out many such areas if you track your cash flows closely. And then you cannot say that health insurance premium is unaffordable. I am not saying that you should stop enjoying, but have a considerate view on priorities. Take a holistic view of your finances and have maximum possible health insurance coverage.

There’s another school of thought which says that your health insurance cover should at least be equal to your annual income. The main purpose of buying health insurance is to lessen the burden of paying complete medical bill in case of any eventuality. I  believe that the way medical and education costs are increasing, going forward life is going to be very difficult. Having health insurance is good but many times health insurance may not be enough, so one should also accumulate decent medical corpus too. Be ready for the emergencies. (Read : managing financial emergencies)

What do you think how much health insurance cover one should have? And do you agree with me on the points stated above? Do share your views.

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He’s MBA ( Finance) gold medalist, a CERTIFIED FINANCIAL PLANNER and SEBI Registered Investment adviser. An ex banker , having a decade long experience in financial services industry he manages clients across the globe. He is a regular contributor to various leading Media and publication houses. He keeps on writing for Moneycontrol, Dainik bhaskar, Business standard etc. He also delivers training on Various personal finance topics to various corporate houses. You may get in touch with him at [email protected]

15 COMMENTS

  1. I appreciate the importance of Health Insurance. What bugs me is that as age advances , the premium increases year on year & after Retirement one finds it difficult to shell out ever increasing amount though it is a must.

    At 60 I pay around Rs 44000 for Max Bupa Gold for Rs 5 lacs for self & wife. Iam looking for a cheaper option. Luckily, Iam also covered by Army’s ECHS for self & wife for life being an Army Pensioner.

    • Dr. Shekhar, i don’t think you will find any cheap option in this age group. But yes, if you shift towards a nationalized company there you may find any economical policy but then you will have to compromise on some features which are there with max bupa. You may check with religare health insurance, there premiums are less as compared to other private players.

  2. Hi Mani, Nice post.

    I am convinced from the awareness about Health insurance.
    I studied Claim ratios on IRDA annual report2100-12.
    nationalized company claim payout is best
    & after that
    1.Star
    2.icici lombard.
    3.iffco tokio
    good Claim payer more than 85%.
    but again these products are costlier.
    Further i observed that other players are having claim payout of below 60%.

    My details are as below
    A) self age 29 Salaried CTC 7.25 p.a health issue Suffering from back pain & fissure
    B) Wife age 25 House wife -(No children’s yet) health issue Gynac issues
    C) Dependent mother age47 self employed with Annual income of 1.2lacs. health issue Gynac issues

    Employer have taken Oriental mediclaim included in ctc
    for Sum assured of Rs.2lac family floater but my mom is not covered in that.

    considering this
    Having budget of Rs.5000-10000 premium,
    I am confused
    1. For whom medical insurance i shud take ? only for mom or family floater.
    For How much of Sum Assured?
    2.Which Co?
    3.Which plan?

    Please provide me your expert advise.
    I am based at pune Chinchwad, will be happy to see sincere adviser on this a issue.

    Aryan
    9923032665

    • Aryan, if you have actually understood the article to the T than i guess ” for whom to take” and ” how much to take” are not the right questions to ask.
      Every person in the family should have adequate insurance coverage over and above what your employer has provided.
      Now as far question of which company and which plan…you have to do some research. And as far as my advise is concerned, i am ok with any plan in this age. the point is that you should have decent sum assured. Understand how capping and sublimit works, what are waiting periods, what waiting applies to you. As you have quoted your budget, so better to go with a very simple plan with no additional benefit .

  3. WHY I Need HEALTH INSURANCE

    I saw her frantically reciting a mantra. Her hands were intensely locking each other in prayer. Tears were there; which she was trying to hide from the curious eyes of onlookers. I still do not know her name. I never asked her.

    She was hardly 18 or 19 years old. All that I could gather from around was that her only brother; a 24 year old boy was being given critical care inside an ICU of a Chandigarh hospital. She was sitting outside in the corridor explaining her ‘middle class to look at’ father that they can call up some uncle of theirs and he might just help them with some money.

    I heard a nurse telling her father to deposit INR 1, 00,000 more for further treatment; as his son had been diagnosed with Kidney failure and needed critical dialysis & some more.

    I saw no one else from their family around. I very carefully dared to ask the father about ‘What happened’? His fearful voice told me that his son Siddharth is an MBA and is working in the sales team of a telecom company. He was slightly obese but otherwise completely healthy till about last week when he vomited and was brought to this nearby hospital (unfortunately a very costly hospital).

    I was in the hospital because my mother had to go through a minor orthopaedic surgery after she fractured her left leg. I could not control my curiosity to know more about Siddharth. I picked up my visiting card from my car in the parking and just walked into the room of the Siddharth’s doctor.

    I introduced myself and asked for his 5 mins. He consented to my request. What he told me was very shocking:-

    – Siddharth’s kidney failure happened because of ‘hypertension’. Even Siddharth did not know that he had hypertension till he vomited.

    – Doctor told me that these days 2/3rd of the total patients who develop hypertension and diabetes fall between the ages 18 & 35.

    – ‘Heart Attack’- a term which was usually associated with middle aged UNCLES only is attacking the ages 27 – 40 maximum.

    I could not believe my doctor. My anxiety took me to the wards and I even peeped into the private rooms. The doctor was right. The wards had as many or more young patients as old ones. The Heart unit, the cancer unit, the kidney unit, the pulmonary unit – unfortunately all looked very young.

    I called up my school time friend who is a famous doctor now and he laughed at my observation. ‘Akash , which world are you living in ?’ he asked me. He told me to go to any hospital in India and check for myself that 20 to 40 is the new age ‘happening age’ for most malaise around.

    Next morning I decided to go for my complete body check up. The reports came in the evening and told me that although I am disease free but a few blood report readings are nearing borderline. I am a teetotaler. I take ‘Stress management’ sessions for corporate organizations. I regularly exercise too. WTF! My false confidence that I am over healthy and nothing can happen to me had slightly been dented.

    My mother needed 5 days of post operative admission in the hospital. I was by her side for all time. I decided to use these 5 days as an opportunity to learn more about the How’s and Why’s of ‘What is happening around’. I spent time with young patients in wards, their attendants, the doctors and even observing the queues in OPDs. This is ALL I learned:-

    1) Whatever your age, income, stage of life be; GET THAT very important ‘Medical Insurance’ for yourself and if possible for your family too. Majority junta lives in that foolish and false confidence that ‘Jab hoga dekh lenge’ or ‘I am too young for all this’. Damn it! Get that very best policy. Do not SAVE here. Even if you are not earning; save from your pocket money and GET THAT policy. And I strongly recommend a cashless policy. You’ll end up screwing many a thing and people because of your ignorance or stupidity about THIS very important aspect of life. A simple dengue treatment e.g. at a private hospital can put down you or your family by as high as 80-90,000 INR. Almost every hospital today has a sales and billing target to achieve and you become the “bakra” . Persistently ask your parents to go for a family policy if they haven’t. If your family already has one -Check their policy yourself. Normally we think ‘Papa ke paas kuch na kuch hoga’. Jo hai ussey aaj hee check karo! Because, it might be very poor and might need a supplement policy. We save money at smallest of places but we err here. Dimaag Lagao !

    2) If you can’t beat your friends in competitive exams, marks, salary, car, relationships: BEAT THEM IN ‘HEALTH’. Most of them are becoming JUNK while trying to win the ‘Rat Race’…Everyone is running in life. You can make a statement by running in a park every morning or evening. I feel like a king when I am running because the breeze is falling on my face and the whole earth is below my feet. Get that superiority complex by keeping ‘Fitness’ ahead of everything else in your life. Don’t think you’ll begin to do it ‘when this / that happens’. Do it today. Trust me if fitness becomes a habit with you- it will be one KILLER feeling of a lifetime. Majority people think: ‘Money= Money only’. Money for me is ‘Opportunities which get created because of FIT attitude, energy, health & state of mind’…Be a Millionaire!

    You can have excuses ….or you can have a fantastic fitness level. Choose!

    3) I was a chain smoker 8 years back. I used to drink a lot, eat almost all crap & further had lousy lifestyle habits. I used to remain very busy telling the world that ‘I am a very cool guy’. Today I do not do ANY of this & just wonder ‘Why the hell did I get into doing it initially’. Between the two lives – THIS life is notoriously beautiful. Last Dec 31st at the New Year party I did not drink, did not smoke but trust me- ‘I had fantastic times’. Next morning when I woke up for my ‘running’; I felt kickass.

    The more we move away from nature or natural stuff- the more we become vulnerable to become Junk.

    Bunk the Junk. One Life! Do not let laziness and temporary excitements ‘Take your breath away’.

    Rise & Shine

    From a blog by Akash

  4. Gr8 job..I appreciate every one who took effort and spared their time to throw some light on this ….. I am about to buy a Health insurance for my self …BUT after reading u all I have decided to go for atleast 1 insurance for every 1 in my family…..I am going to take my step towards a healthier and safer tomorrow..

  5. Hello sir,
    i am still a fresher,aged 21 years. What is the best time for me to take a medical insurance and how much?

    • Chirag, this is nice that in such a young age you think about Health insurance. Are you working somewhere? has you employer offered some sort of cover?
      start with atleast 3 lakh of Individual cover.

  6. I am 68 and my wife is 59 years old staying in Pune . We have individual medical insurance policies from National of Rs 1,00,000/- and Rs 3,00,000/- for myself and my wife respectively.
    Considering rising medical expenses by day, I want to cover both of us with Family Floater Med Indu policy of Rs 5 to 7 lakh. Kindly advise:
    1) Most suitable and economical policy for my profile.
    2) At what stage I should discontinue our existing policies once the new Family Floater is in place.
    3) is it possible to Migrate our existing policies with the new Family Floater?
    4) Would it be better to have Super Top up with Family Floater policy.

    Awaiting your early reply.
    Suresh Naik

    • You may Port your existing policies to the new policies, with higher sum assured. They will be suitable but may not be that economical. Considering the age, be ready to shell out huge atleast in comparison to what you are currently paying. Yes you may consider buying Super top up plans too with deductible of what you currently are covered of.
      In case of your wife, since she is below 60, you may get a good policy with no sublimits, but in your case be ready for some co payments or any other kind of such limits. I would suggest you to have a look at 3-4 policies and select what suits you. Check out Apollo Munich, Religare, ICICI Lombard, Star.

  7. My Ideal Medi Cliam Strategy would be as

    Base Cover : 5 Lakhs
    Super Top Up : 20 Lakhs
    Total Cover : 25 lakhs

    Base Cover of 5 lakhs is good to cover 95% of the normal expenses but a problem comes when you have any super critial disease or an accident than Super Top of 20 lakhs can cover 99% of total your healthcare cost. Personally 1 can somehow arrange basic cost of say 5 lakhs. But the real challange is next 20-25 lakhs which is out of question until ur super rich. So better go for super top up policy

    Even if you from small city, town or large city.. If you get any major health issue you need to go to large metro for treatment which will cost you bomb

    I think with rising healthcare cost 1 sould compulsoryly have a cover of atleast 25 lakhs

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