Insurance a health protection during uncertain times

Financial security becomes an essential requirement in today’s world. While we are economically impacted by Covid -19, we fear that this could further impact our investments and financial stability. However, most of us overlook the most important financial tool that can create an effective hedge against the unwarranted events and ensures that your financial wellbeing is protected - Insurance.

Insurance is the most basic and cost effective instrument to protect your family against any unforeseen event occurred to the earner. This article brings us the need and requirement of securing your financial well-being by insurance.

Health Insurance

Health insurance has become a necessity today. With a lifestyle encompassing stress, pollution and not enough exercise, healthcare related issues are on the rise and now Covid-19 has further added to the concerns. At the same time, healthcare is becoming increasingly expensive. A good health plan ensures that medical expenses incurred on hospitalization for more than 24 hours are covered by the insurance company. This may include room charges as well as the money spent towards the surgeon, nursing, medicines and other tests. It is always better to enroll in health insurance coverage as early as possible.

Health insurance premium increases with age, more the age, higher the premium. A health insurance policy provides a continuous and adequate lifelong cover against any eventuality, and the premium payable is also very competitive.

A family comprising of children and elderly should opt for a cover that offers more than just a normal mediclaim. A cover that takes care of Outpatient Department expenses like the vaccination for kids, maternity expenses to regular check-ups of elderly members of the family is preferred. An individual keen to cover himself and the family against maximum risk exposure should go for a top up mediclaim cover, which provides higher hospitalization cover.

Health insurance also gives you the benefit of a cashless claim, where the hospitalization expenses are directly settled between the hospital and the insurance company.

Features of Health Insurance:

Pre and post hospitalization expenses

Most of the policies cover hospitalization expenses - that is the medical expenses before getting admitted to the hospital and post hospitalization - while getting discharged from the hospital. It also covers expenses for a certain number of days prior to the hospitalization and specific period from the date of discharge as mentioned in the claim.

Health insurance enables you to avail a cashless facility without paying for the treatment on spot. As insurance companies have tie-ups with various hospitals, through Third Party Administrator (TPA) they directly settle the bills with the hospital. This comes handy to the insurers as during an emergency there is immediate treatment without the requirement to pay cash on urgent basis. Be it planned or emergency, on hospitalization the insurance company needs to be informed. In case, the expenses are above the limit and items are not covered in the policy, the insured needs to settle directly with the hospital.

At times the policy does not cover cashless facility for specific hospitals. In such cases the policy holder needs to submit the original bills and receipts to the insurance company for reimbursement. Based on the reliability of the documents sent, they will accept or reject the claim. Thus, it’s advisable to treat yourself under the network of hospitals offered in the policy.

Few policies have free medical check-up in their list. While some can take provision for reimbursement of cost on health check-up based on the conditions mentioned in the policy.

Travelling cost such as the ambulance charges are covered by a few policies.

Health insurance provides this facility to its policy holders by giving them rewards for the years where there was no claim taken. This reward proposes two benefits that is increased sum assured and low premiums.

The difference in the time period of claiming one insurance to the other is said to be the waiting period. The waiting period differs from policy to policy and during that time, even if there is a medical emergency, an individual cannot claim. Some policies don’t have a waiting period and some could be ignored if policy is purchased early.

One can flexibly renew their health policy online. Some policies have lifetime renewal option.

Now policies are available online and it’s convenient for insurers to get the policy in a few clicks. This is a big change from the offline model driven by agent recommendations. In online mode, you have the opportunity to compare multiple policies and select your insurance as per your choice.

Most policy have coverage on OPD charges.

Individuals are eligible to avail a tax benefit on health insurance. Under section 80D of Income tax Act, 1961 one can avail up to Rs. 25,000 tax benefit on premium paid for self, spouse and children below 60 years of age. For a senior citizen up to Rs. 50,000 can be availed. One can even claim tax deduction on expenses incurred for preventive health check-ups, up to Rs. 5,000, as a part of section 80D.

It is an additional benefit that enhances and expands the coverage as per your requirement and at an effective cost.

Different types of Riders to Health insurance:

Room rent rider - this rider enables the policy holder to opt for a room with higher sub-limit or without sub-limits. Many insurance companies have conditions on room rent such as either general or semi-private rooms in their insurance policy. With the help of this rider insured can avail room as per their choice without paying extra at the time of admission.

Maternity Cover – this additional rider can insure the pre and post hospitalization and delivery expenses.

Hospital Cash – this rider takes care of the daily cash that the policy holder may require for taking care of the medical expenses during hospitalization.

Personal Accident Rider – this rider ensures all kinds of accidents such as accidental death, permanent total disability, permanent partial disability and temporary disability. This ensures coverage on medical expenses in case of any injury caused due to accident and includes unplanned expenses. In a situation of death caused due to the accident, the insurance company pays an additional amount of death benefit to the beneficiary based on the policy conditions.

Likewise, there are various riders or add-ons that individuals could avail as per the company’s policies and as per their requirement.

Term insurance

Term insurance is the most affordable form of life insurance. It’s a type of cover that provides coverage for a certain period of time specified in years. It is purest and the most cost effective form of life insurance. At any point, if the insured dies, the nominee receives the death compensation.

In term insurance you seek the advantage of higher life cover while you pay a nominal premium in return. For example, life cover of Rs. 1 crore is assured on paying a premium of Rs. 500 p.m. The premium payout can be done in lumpsum or regularly over a few years.

Features of Term Insurance:

Larger Sum assured

It is the amount to be received on the demise of the policy holder from the insurance company. When compared to other insurance policies, the sum assured is higher when it comes to term insurance and likewise the premium is affordable.

The age bracket for the insurance is between 18-65 years.

This ratio reveals the percentage of claims received and paid by the insurance company for the financial year. For example, if insurers settle 70 out of 100 in a year that means, 70% of the policy holders have received their claims for the year. It is advisable to look at the claim settlement ratio of the insurance company before purchasing the policy. Higher claim settlement ratio ensures higher chances of your future claims to be settled by insurers in time.

Insurance company requires a medical examination report of the policy holder to understand his/her fitness and eligibility towards the policy. The test highlights any existing medical condition and illness and keeps a track of your medical history too. According to the test the further claim procedure gets easier and at times the premiums are reduced based on the company’s policy. Precise the medical report, lesser the rejection during the claim.

They are additional coverage that can be achieved on the existing term policy. It’s a customized coverage based on the policy holder’s requirements. This implies extra cost but it enhances the utility of the policy.

Benefits of term insurance:
  • The most likely benefit provided by term insurance is it’s easily affordable with higher benefit and low cost.
  • Longer coverage: This insurance is available right until your life expectancy.
  • For loved ones: The insurance becomes essential for your family members as after your unfortunate demise, they could benefit from the received amount for their regular expenses and their long term goals.
  • Tax Benefit: With term insurance individual can avail tax benefit over sum assured and premiums paid under Section 80C of the Income tax Act, 1961.
  • Flexibility to pay premiums: a few insurance company allow a flexible tenure to pay premiums like 5-10 years and you get the full coverage of the policy.
Summing up

It is advisable that every individual should have health and life insurance for themselves and loved ones. This becomes even more pertinent in the current pandemic situation. Insurance can clearly reduce the stress one goes through in medical emergencies by reducing the financial burden.

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