Private (out-of-pocket) medical expenses account for a sizable portion of all medical costs in India, with government subsidies and health insurance covering only a small part. It would help if you prepared for this scenario because it will likely burn a hole in your retirement fund. Therefore, setting aside money for retirement healthcare costs during your earning years is crucial. Most insurers will cover you, but there will be too many exclusions, or purchasing insurance will be prohibitively expensive or impossible. Otherwise, the premium amount will be significantly high. Deferred health insurance is helpful in this situation.
What is Deferred Health Insurance?
The general earning or paying years for most people are between the ages of 25 and 60 when the person is able to pay and qualifies for health insurance. Between 60 to 80 are the coverage years, when insurance is scarce, difficult to obtain, and premium payments are expensive.
Moreover, healthcare in India is becoming increasingly expensive, which impacts the savings of people. According to a market study, medical inflation is significantly higher than general inflation. The overall inflation has increased at a 6.5% rate over the past five years. On the other hand, medical inflation exhibits a 15% annual growth rate.
A deferred health plan is a solution in such situations. Saving money now to pay health insurance premiums later, is referred to as deferred health insurance. Health insurance that is deferred is deemed superior. Here are some fundamental justifications for choosing deferred health insurance in the future.
1. Unlike employer-provided health insurance, deferred insurance is long-term.
2. After retirement, when health insurance premiums are high, it is beneficial.
3. It provides financial support when you retire and are no longer eligible for employer-sponsored health insurance.
4. Health insurance has too many exclusions, making it useless after retirement. However, new exclusions won’t be applicable if you buy insurance in advance.
5. If you buy retirement insurance now, you will be covered and won’t need to look for new insurance policies once you retire.
6. What will the self-employed individuals do? Employer-sponsored plans do not cover them. Saving up for expensive premiums to cover health care costs in old age seems to be the only option.
Is There Eligibility Applicable?
A deferred health plan has an eligibility criterion. Only for the ones between the ages of 18 and 55, deferred health insurance is an option. At maturity, the financial benefits are available.
Checklist Before Getting Deferred Health Insurance
Before providing deferred insurance in your name as a product, a good insurance company may address certain issues with you.
1. It will help if you consider the risk of morbidity (the presence of a severe illness) 20–25 years from now. Whether the probabilities will change due to social or environmental factors is something that you (the insurer) should confirm.
2. The size of the insurance policy ticket should be disclosed. For instance, whether the indemnity amount is capped or an estimated cost in case of a heart attack.
3. If the product should be set up as a defined benefit or indemnity, they (the insurer) should explain why.
4. The insurer must make it clear whether or not you (insured) must undergo routine health checks during the waiting period.
5. The insurer can determine whether you can use it to adjust the premium or the amount covered.
Current Status
As of right now, India does not have any rigid, deferred health insurance plans. Lacking such a product or if you don’t typically purchase deferred health insurance, setting aside a particular corpus to cover high health insurance premiums in your later years is imperative. Or you should set aside enough money for medical expenses as you age.
However, insurance companies already provide multi-year risk covers for morbidity (e.g. critical illness riders on life insurance policies). They will undoubtedly figure out a way to factor in such uncertainties because they are in the business of defining, quantifying, and profitably covering risk. So, it may be possible to create a product that offers deferred insurance.
Conclusion
You must also invest in your health to reduce ailments in old age. Regular health check-ups are highly recommended at least once a year. Also, don’t forget to take the necessary actions to lead a healthy lifestyle. However, maintaining good health does not guarantee that your medical costs will be under control as you age because it does not shield you from hereditary or congenital illnesses, accidents, etc.
You can pay for medical expenses with deferred plans even after you have left the service. You will now have a safety net to rely on in difficult times. When earning your maximum income, you can assemble premiums with this type of insurance. Therefore, you can use this money to pay for expensive health insurance premiums when you get older.
