Wednesday, December 16, 2015

Guide to Health Insurance

 

There are innumerable examples of people being shocked on seeing a hospital bill at the time of being discharged. It happened to my family last year, where a somewhat complicated procedure ended up costing us more than twice the amount we thought it would. Insurance covered less than a third of the total bill. As a result, the remaining amount was borne by us. (Calculate the amount of health insurance cover you required based on your city of residence).

Most of us are fortunate enough not to have anyone in our family get hospitalised for a serious illness. And therefore, the following table might come as a surprise. Given below are potential costs of hospitalisation for certain ailments across leading hospitals in Mumbai (amounts are in Rs Lakh and the highest 1% of bills have been removed). Costs in other cities are not much lower.

Source: Paramount Healthcare Management cost data for 2012-13.

 

 
Source: Paramount Healthcare Management cost data for 2012-13.
 
There is a very good chance that you have health insurance from your employer.Compare some of the above costs to how much coverage your current policy covers you for. Most of the time, we assume that serious diseases will never happen to anyone in our family as we are more or less healthy. That would be an incorrect assumption, as diseases like cancer can happen to anyone.
 Health care costs have inflated at a double digit rate over the years

Further, as you grow older, medical costs will be far higher than they are today (over the last decade these have been inflating at double digit rates per annum). Your company cover will cease to exist when you need it the most – after you retire. At that point, it might be too late to get yourself a new health insurance policy.

In a few quick steps BigDecisions walks you through how to ensure you are in control of your family's health:

  • The most important starting point is to understand and see for yourself how much healthcare costs of different ailments in your city cost. If you are a family of two ie. no children the most prominent diseases list will be different from that of a family of four that includes two children. This can be viewed in a matter of seconds.
  • The next step is to then see how much health insurance is adequate for your family. While there is no way to be absolutely certain, we take a conservative approach and assume how adequate is the amount needed, assuming each member of the family might need to be hospitalised once during a year. It is always better to be conservative in such cases than to be sorry.
  • Of equal importance is to get a sense of how much it might cost to get a health insurance amount that is deemed adequate. All of us would love to have lots of insurance but unfortunately, it comes at a cost and each consumer has to make his own decision of how much he can afford to pay. At this stage, you have understood how much is adequate so you are unlikely to go for an amount that is inadequate for your family, even though you might not opt for the highest amount suggested.

    Post this, the only step is to select a product, which now becomes a lot easier since you have understood your exact need and can now be decided based on:

    1. Annual price or premium that you will need to pay.
    2. Your comfort with the brand/company and their reputation.
    3. Appropriateness of the policy's conditions for you.

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For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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