It’s never too early to start investing in health

Amit Bhandari

The healthcare system in the country is infamous for incurring the highest out of pocket health expenditures. Not surprising then that in August, last year, the NDA government announced plans to increase public investment in health from 1.04% of GDP (gross domestic product) to 2.5% by 2020, with 70% of this being dedicated to primary healthcare. It is the result of an overhauled draft National Health Policy that now emphasises on substantially mounting government investment in public healthcare facilities across the country.

It is important to view the government’s efforts in light of the fact that it is never too early to start investing in one’s health. Consider the following scenario. Twenty three-year-old Neha Kapoor joins an advertising firm as a trainee executive. She earns Rs 25,000 a month. Smart and ambitious, Neha looks like she knows her mind. Now, let’s consider the state of her personal finance. There’s a public provident fund account and an LIC policy, gifted by her parents. At 23, Neha, like many of her contemporaries, has no health insurance coverage barring the Rs 5 lakh coverage provided by her employer.

Young and confident, she feels that there is no need to buy a health insurance of her own, at least not yet. Unfortunately, there are people in their thirties, who also feel the same way. Sadly, they couldn’t be more off the mark.

Life is getting expensive and 2016 will be no better. As modern living costs and medical treatments get costlier by the day, a Rs 3-lakh cover is unlikely to cover hospital costs beyond five days, particularly if a surgery or complicated ailment is involved. In fact, with medical costs going through the roof, it will be increasingly difficult to fund medical expenses from one’s personal savings. Under such circumstances, it is wise to be slightly pre-emptive and buy a health insurance that can take care of your savings and your loved ones. There are several advantages of starting early. To begin with, since the health risks are lesser when you are 25, you get covered for much more and for a longer period of time.

Secondly, the earlier you buy your health insurance, the lesser your premium amount. For instance, you can opt to spread out the term of insurance over a lengthy period since your life term is longer. Whereas, if you wait until forty to buy a health cover, your premium amount will be higher since your life term is shorter.

Get a medical insurance even if you are covered by your employer. This is because in case you or your near ones are admitted to a hospital, an employer’s coverage will not be enough to cover the complete cost of treatment. Also, once you retire and the employer’s coverage ends, you will need an insurance to cover your costs, unless you want to spend all your hard-earned savings in medical costs. Also, it would be far more difficult to buy an insurance cover at 60.

Health insurance products today cover day-care procedures, OPDs, vector-borne diseases and even maternity benefits. So, even if you are not admitted to a hospital, some insurance coverages will take care of most of the medical costs in your life. It is important to remember that there is a waiting period between buying a health insurance cover and receiving coverage for certain illnesses, pre-existing diseases and special treatments. So the earlier you buy your insurance, the greater your chances of receiving complete coverage for a surgery or medical cost.

In short, if you are waiting to hit 60 before you buy your health insurance, you should be prepared to shell out lot more in premiums. Currently, the government is stepping on the pedal for a universal health insurance scheme. The wheels have been set in motion with the Pradhan Mantri Suraksha Beema Yojna, provided through banks at a very low-cost premium to all bank account holders, including Jan Dhan account holders. The cost of transaction is expected to get lower as general insurers come together to utilise technology. This will also help to reduce the cost of insurance products.

The writer is Head – Claims & Underwriting, Health and Agriculture Insurance, ICICI Lombard GIC Ltd. The views expressed in this article are his own