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ICICI Lombard Expert Blog

Don’t Ignore Health Insurance at Any Stage of Life

October 21 2014

During a routine medical test done by his company, Mr. Manish (46) was shocked to see that his lipid profile readings were indicating high levels of cholesterol and slightly high sugar levels. On the advice of his family doctor he did extensive tests only to be diagnosed with a rare liver disease. He was advised by his colleagues to take an additional health insurance policy over and above his existing employer provided cover so in case there are major complications and possible hospitalization, the new policy could cover higher expenses incurred for the treatment.
As advised, Manish proceeded to buy a health insurance from a referred insurance advisor and after declaring his present health position. Repeat medical tests done by the insurance company once again revealed the cholesterol levels due to which the Manish was charged a loading or additional premium. Secondly the company inserted a 4 year waiting period clause for any treatment related to the liver disease. Having worked for several organizations over the last 2 decades, Manish has always enjoyed medical cover from his employers and therefore never felt the need to think of buying a separate health insurance policy.

In another case Mr. Iyengar's 8 year old son was diagnosed with hernia and underwent a surgery which left him dearer by Rs. 40000. Mr. Iyengar had quit his job a few months back and was so busy in his start up venture that he had ignored the fact that he no more enjoyed his former employer's health cover.

There are thousands of such examples across the country and especially in urban areas, inspite of the awareness unless a calamity befalls the family or relatives, most ignore buying a health cover.

There has been a marked change in the lifestyles and eating habits of people in the last few years or so. Long working hours, desk jobs and changing eating habits are taking its toll on the people's health. The television and smart phone culture is ensuring that we have younger people too which includes students who are living sedentary lives. We also discount events such as accidents which can affect anyone irrespective of age and this can result in recurring medical expenses till the time the affected person is cured completely.

With the advent of good quality private hospitals the treatment costs have also gone through the roof. Improvement in treatment techniques and medicines have only pushed up the medical costs. Even a small medical procedure such as hernia or kidney stones today costs at least 5 times more than which it would cost 10 years back for example recently a kidney stone surgery for a 35 year old lady cost her ` 1.40 lakhs in a well known private hospital in Mumbai. Fortunately for her, she was covered by her personal health cover which she had taken a few years back.

Consequences of not having an adequate health cover: Many families have seen their financial goals going for a toss due to unexpected and uncovered medical expenses. The funds earmarked for some prominent goals get used up for funding the hospitalization expenses. Some people even go into debt as the resources are not available and they have to resort to either personal loan or borrowings within family and friends.

How much cover is adequate for various age categories?

Affordability to pay premiums and capacity to bear the consequences of loss pay a major role in deciding how much cover one should take. People with high income should ideally cover their minor children for at least ` 3-5 lakhs. Most companies offer constant premium for the age category of 0-18 years. Someone who has just started working and is not covered by any employer health cover, should start at Rs. 2 lakhs and scale up his cover to` 5 lakhs as one moves to his/her 30's. Family floater policies which cover the entire family with a single cover are preferred for younger families till age 45 years.

Beyond 45 years of age, if someone proposes to take health insurance, individual covers are suggested so each spouse is covered for a separate cover as the need for health insurance is higher in the age bracket of 45 to 50 years and only keeps increasing. Most companies call for a compulsory medical test for people whose age is 46 years and above, therefore it's necessary to take up medical cover much before this age to ensure coverage at standard rates. People who are in their 50s and 60s will ideally need a decent cover and very likely that most in this group would have acquired some pre existing diseases like higher sugar and Hypertension levels. They too can be covered albeit at a higher premium due to premium loading but there is no choice as preserving retirement corpus becomes necessary at this age and therefore buying a medical cover at this age (for those who are not covered) becomes utmost important.

Today many insurance companies offer cover to all age groups from 0 to 85 years but its subject to fulfilment of certain conditions like medical test and level of health. Some offer health cover to senior citizens on the condition that only 60 – 70% of medical costs can be reimbursed. Even then the cover is worth as a substantial part of the expenses can be recovered. Illness and injury can affect anyone at any age; therefore health insurance is vital at all stages of life.

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