Do you have an optimal health insurance cover?

5 MinsNovember 07, 2022

An alarming rise in heart or cardiovascular diseases and strokes have been reported over the last few years. Owing to the stress and the lifestyle we lead, young individuals have also been diagnosed with cardiovascular diseases. It is a concern for people across age groups, not just the old.

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As a preventive measure, we must make a conscious effort to lead a healthy lifestyle and make yoga, exercise and meditation a daily ritual. Besides, it is worthwhile insuring yourself (and your family members) with optimal health insurance coverage. This is because, if you land up in the hospital with any cardiac ailment without health insurance coverage, it could drain you financially, given that medical inflation is soaring.

How much should your health insurance coverage be?
While there is no magic number, if we proceed with the income-based formula, your health insurance coverage should be 50% to 100% of your annual income. Apart from income, here are a few other key factors you need to evaluate to determine an adequate sum of health insurance coverage:

  • Your current age.
  • Your family’s medical history.
  • Whether you, as the insured, have any pre-existing diseases or comorbidities.
  • The number of family members/dependents you intend to cover under the health insurance policy.
  • Your and your dependent family member’s current personal health.
  • The state and city you reside (to assess the healthcare facilities, the cost and networks of hospitals that have tie-up with the health insurer).

Ideally, given that healthcare costs are rising, you should increase your sum insured by around 10%-12% every year. The higher the sum insured for health insurance, the better it is.

[Also Read: How much health insurance do you need?]

When you buy a health insurance policy, check the following:

  • Whether there are exclusions from the health insurance policy (viz. medical expenses arising out of a pandemic, war, riots, terrorist attack).
  • Is there a co-pay clause (a clause in the health insurance policy that requires cost-sharing by the insured).
  • Whether certain day-care procedures are covered.
  • What is the coverage for pre and post-hospitalisation expenses; the number of days it is allowed.
  • Whether there are any sub-limits on the room rents.
  • Are there limits on preventive health check-ups (like x-ray, Cardio Doppler test, CT scans, MRI, etc.), the ICU charges, the cost of treatment, surgeries (including the major ones), etc.
  • The network of hospitals that have a tie-up with the health insurer and whether a cashless facility is available.
  • The background of the promoters of the insurance company and the number of years of its existence.
  • The financial strength of the insurance company by evaluating the claim settlement ratio (i.e., the percentage of claims settled against the total claims lodged with the insurer; this ratio should be among the best in the industry), the solvency ratio (i.e., the net worth and the reserves and surplus held by the insurer), and the profitability ratio (to understand whether the insurance company generates enough income for its stakeholders after meeting all the expenses).

Making a prudent choice with your health insurance plan would provide financial security to you and your loved ones; it would not weigh down on your family’s personal finance in the case of an unfortunate event.

Axis Bank has tied up with leading health insurers offering a range of health insurance plans so that you and your family members are financially prepared and well protected.

Other benefits:

  • The health insurance premium you pay every year will entitle you to a deduction of up to Rs. 25,000 per annum under Section 80D of the Income Tax Act, 1961.
  • If you, a non-senior citizen, are also paying health insurance premiums on behalf of your family members who are all below the age of 60 years, the maximum total deduction you can avail of is Rs. 50,000 per annum (including for your own health insurance policy).
  • If you are a non-senior citizen and are paying health insurance premiums on behalf of your family members, which include parents over 60 years of age, the maximum total deduction you can avail (including for your own health insurance policy) is Rs. 75,000 per annum.

Disclaimer: This article has been authored by PersonalFN, a Mumbai-based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.