Each one of us is well aware that good health is most important in order to live a fulfilling life. Also, we all believe in preaching the famous phrase that “Health is wealth”. Hence, we know that neglecting health can have huge repercussions.
If everyone could follow the same then the world would be so much better with more healthy people and fewer diseases. But, we know that this can only happen in an ideal scenario. We or our close ones would eventually have to go through ups and downs in health throughout the life.
India is still in the earlier stages of a developing country. The government’s focus on healthcare can be seen in our health budget which has just close to 2.5-3% allocation in our annual budget. The world over average is close to 6%. India is still 2 to 3 decades behind in order to achieve some form of government-sponsored universal health care.
I would like to share a few recent examples where people’s lives were affected due to a sudden health problem.
One of my relatives suffered a hereditary infection and had to undergo an immediate surgery in a private hospital. There was no good option to get this treated in a government hospital. The cost of a minor operation turned out to be close to 1.4 lakhs.
Now, he was not insured as he was self-employed. He also didn’t have any kind of health policy. He believed that the age of 32 is very less to think about the health policies. This operation had a major impact on their lives.
They had only 2 lakhs of liquid money out of which 1.5 lakhs was used for the operation. The decision was taken to use the fund kept aside for their child’s admission to the best school in the city. They had to modify their decision and then had to admit their child in an average school. A decision of not taking a health policy had a major impact on their future planning. They had to forego their planning on the kind of school they had wanted for their child.
An uninsured person not only impacts his/her life but majorly impacts the lives of their loved ones in case of any miss happenings.
Another kind of issue which insured people are facing is under insurance.
My friend’s mother recently had knee replacement surgery on both her knees. The cost of the replacement came out to be more than 4.5 lakhs. The amount for which they were insured was 2 lakhs. But, only 1.6 lakhs got approved due to the variously hidden clauses of the health providers.(Our next post would help you to narrow out your decision of buying a full proof health policy.)
They were short of approximately 3 lakhs. They had to break their savings in order to pay the bills. This would be having a major impact on their future goals as they had to break the compounding.
Please go through the article to understand more about the most important factor in our investing life i.e. compounding.
An uninsured or underinsured person/family poses the gravest danger to their financial goals.
Every year lakhs of families in India go to deep financial troubles because of the above-mentioned issues. A health tragedy in today’s world can easily take your family from middle class to the lower middle class. There are a number of other health issues that person can go through in their lives such as critical long-term illness. To cover long-term illness, there are options available to help you sail in those times of need. We would be covering those options in the future posts.
Many insured people in today’s India with adequate coverage fail to include the most important factor i.e. healthcare inflation.
The healthcare inflation is increasing at an astounding rate of 15%. In India, many policies are still sold in the form of No claim bonus. People opt for this kind of policies because we feel we have an inherent right to get a bonus or benefit if we don’t make any claim.
We get so happy with that 3 to 5 thousand discount that we leave ourselves vulnerable to the future uncertainties. In my opinion, we should not opt for these “No Claim Bonus” policies. Instead, we should opt for the policies where the coverage amount increases every year when we make no claim.
For example, Say your policy has a coverage of 5 lakhs. The policy states that for every year a claim is not made, the coverage would be increased by 20% up to a maximum of 100-150% percent based on your policy. So, in such a scenario, your coverage would increase as follows:
As per the above table, your coverage amount would be doubled in 4 years if you don’t make any claim. This would be possible if your health policy has the option to increase your coverage by a maximum of 100 % of your insured amount. Before deciding the amount required for your health policy, factor in this inflation factor and then arrive at your decision.
Please note that the health premium amount would increase by 2-10% every year depending on the age and pre-existing diseases. This increase can easily be negated by the tax benefit you get under the section 80D.
Under section 80D of the Income-tax, a person can get the maximum benefit of Rs 60,000 which is decided as per the below information:
“Deduction is available up to Rs. 25,000/- to a taxpayer for insurance of self, spouse and dependent children. If individual or spouse is more than 60 years old the deduction available is Rs 30,000. An additional deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 25,000/– if less than 60 years old and Rs 30,000 if parents are more than 60 years old. For uninsured super senior citizens (more than 80 years old) medical expenditure incurred up to Rs 30,000 shall be allowed as a deduction under section 80D. Therefore, the maximum deduction available under this section is to the extent of Rs. 60,000/-. (From AY 2016-17, within the existing limit a deduction of up to Rs. 5,000 for preventive health check-up is available).”
Advent of Superbugs
I would like to point out another issue that we as a nation are facing in handling our health concerns. Each one of us at one point in our lives has taken an antibiotic without consulting the doctor. We do not even wait for our body to generate antibodies to fight against the bacteria.
Anyone can go to a Medical store and ask for any antibiotics as per their wish without a prescription. This has resulted in the very high prevalent use of antibiotics which poses serious harm to our lives. The scientists have predicted that India is posing a serious problem of “Superbugs”, a new term which has recently been coined for the bacteria that is resistant to all kinds of antibiotics.
Now, I am not a doctor or related to any kind of physician. Nor, I am offering you any advice. I just want you to be cautious and get yourself insured. With the advent of newer germs, bacteria, uncertainties in the life, the health insurance of you and your family has become utmost important.
I am sure you have understood that you and your family’s health is in your hands. You have to decide the steps required in order to fully insure yourself against any kind of health problems that may arise in the future.
Make sure that you are adequately insured considering the future health care inflation. This will ensure that every night you would be sleeping peacefully. If the need arises, you would be able to provide the best in class healthcare for your loved ones.
With God’s blessings and good healthcare, you will always be able to fulfill your duties as a responsible child, spouse or parent.
And as I always say, everyone should take all the necessary steps required to protect ourselves from the challenges that life throws at us. So that we are always on our way to achieving our financial goals.