How to select the Right Sum Insured for your Health Insurance policy

You have always been careful about selecting only what is best for you. Taking up the right job, following the right diet plan or buying a car that suits your needs. But is it the same when it comes to health insurance? We feel that we have a health insurance , so we are sorted. But choosing the right Sum Insured is as important as choosing health insurance itself. As having a lesser sum insured than required is as bad as not having one because in that case, you are also paying a premium for it and you also don’t save as much for health, thinking that you have this cover.

Let’s take a minute here and look at some shocking facts

"1 out of 5 cancer patients are within the age of 36 to 45 years"
Source: Times of India

"A cancer patient spends around 20 lacs for treatment, medicines and all other care."
Source: All India Institute of Medical Sciences

So, even if we think we can afford the 20 lac in times of such need, is it really worth exhausting our lifetime savings?

Now, what is the solution you say. Because in times of such emergencies, our savings is what has our back.  But what if we say that taking a health insurance policy with adequate Sum Insured can SAVE YOUR SAVINGS? Let us explain this to you with an example.

Mr. Agnihotri, who is 30 years old, earns 50,000 per month and saves 10,000 every month. By the age of 40, he saves around 17 lacs. But on the day when things come crashing down, Mr Agnihotri is diagnosed with cancer  Apart from the unimaginable mental and physical stress, Mr. Agnihotri also has to arrange for the treatment and medication costs. Based on the health insurance he has, there are 3 things that can happen

  - He doesn’t have a Health Insurance Policy: In this case, the entire expense has to be borne from Mr. Agnihotri’s savings. And if the savings aren’t at par with then expenses, then alternate arrangements like loan or help from family and friends have to be arranged, also leaving him without a security for the next 10 years. 

  - He has a health insurance policy but with an inadequate Sum Insured: In this case, Mr. Agnihotri has to bear a majority of the expense from his savings, as his health insurance can only cover the amount of Sum Insured he has. So, even with a health insurance policy, Mr. Agnihotri is vulnerable when he actually needs to claim for it.

  - He has a health insurance policy with an adequate Sum Insured: In this case, majority of the expenses will be taken care by the health insurer, and even if Mr. Agnihotri requires to pay a small part of the claim (or co-payment, as some insurers have this condition), his savings will not be exhausted as much as in the other 2 scenarios. And this at least reduces some mental stress during the troubled time for the family.

So, we see that a health insurance policy with the right Sum Insured is an investment that can protect your Savings over a lifetime.

So, what all does your Sum Insured depend on?

    - Your age: The earlier you start the higher should be your Sum Insured as the number of years left would require a greater safety net.

    - Your Life stage: Based on the life stage you are in, for instance if you are going to get married or start a family etc, your Sum Insured should factor in the healthcare expenses associated with it.

    - Health Conditions- If you have a history of medical condition in your family, your Sum Insured should factor in the possibility of an unforeseen health condition in the future

   - Dependents in the family- If you are planning to take a floater policy with your family members, the Sum insured should take into account the needs of each member and the future healthcare expenses for them.

 - Lifestyle and personal habits: The kind of job, eating habits, stress levels and other personal habits shows the way for an individual’s future healthcare needs. While choosing a Sum Insured these should be thought through too.

To sum up, we should keep in mind 2 things

- It’s high time that Health insurance is not just seen as a tax saving instrument, but we actually understand the implications of taking or not taking it. Or better put, taking it with adequate cover for a lifetime.

- We take health insurance as early as we can!

After all health is wealth!