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How Much Health Insurance is Adequate for an Individual?

18 May 2022, 1:13 PM

Health is Wealth and living a healthy life is the need of the hour. With advance medical science has increased life expectancy resulting in longer life yet, changing lifestyle conditions take a bad effect on health making people more vulnerable to diseases. Additionally, medical inflation is on an all-time high in the decade i.e. medicines, surgery, treatment, etc are much more expensive to the common population. The rising cost of medical treatment takes a toll on your savings thus buying health insurance is the first step towards conscious financial planning. 

Moreover, the Covid-19 pandemic has exposed the entire globe to a disease that needs medical attention. The cost of treating Covid-19 is hitting the roof and creating a dent on savings. Thereby increasing the need for a health insurance plan.

Importance of Adequate Health Insurance Coverage

It is important to buy an adequate health insurance plan for self and family to safeguard against rising medical treatment and to protect your savings. Your employer may offer health insurance coverage but is it enough? Read through to understand how much health insurance is adequate for an individual?

You could be healthy at the moment but illness always comes without any warning. So, preparing yourself to face the unfortunate events is the wisest decision. Determining adequate health insurance coverage can be a tedious task as there is no specific thumb rule about how much health insurance cover is adequate. Many health insurance advisors provide different viewpoints to this as under:

  • Many leading Health Insurance advisors suggest that an adequate health insurance cover must be decided as per your income. For example, an INR 5 Lakh Mediclaim cover is ideal for people with income up to INR 20 Lakhs, an INR 10 health cover for people with income up to INR 50 Lakhs and INR 20 Lakhs for people with income above INR 50 Lakhs.
  • Others suggest that people should buy health insurance coverage depending upon the city of their residence. For example, if you live in tier-2 cities i.e. mid-sized towns then an INR 4 lakhs to 5 Lakhs of health insurance cover is optimum as the cost of treatment is less as compared to tier-1 cities where the treatment cost is high. So, it is recommended to have a minimum of INR 10 Lakhs of health cover in Tier-1 cities.
  • Some leading health insurance advisors suggest at least INR 3 Lakhs of mediclaim cover irrespective of your income and city of residence.

Yet, there are various factors to look for while determining the right health insurance cover rather than selecting the cover. 

Factors to Consider While Opting for a Health Insurance Cover

The following are the most important factors that you must consider while determining adequate health insurance cover for oneself.

  1. Affordability
    Affordability is the basic and most important factor while determining adequate health insurance cover. Your income is the primary factor to determine your affordability. Your health insurance advisor might suggest you buy an INR 10 Lakh cover, but if your income cannot sustain the weight of the premium amount then why to burden your finances. 

    Tip: Keep a balanced and practical approach while purchasing a health insurance cover. Start with a health insurance plan that is within your budget and does not put weight on your finances and then gradually move towards increasing the cover. Remember you can always enhance your coverage at a later stage with policy top-ups.
     
  2. Employer Health Insurance Cover
    Employers offering health insurance cover is a common phenomenon. Yet, the real question is whether the cover offered by the employer is adequate? Companies cover all their employees under group health insurance which has the same cover for all employees i.e., for example, INR 2 Lakhs of cover for all employees, but it might not be enough. 

    Tip: Additionally, you must check for the benefits and the scope of the health insurance cover i.e. whether it is securing your family. If you feel that the employer’s health insurance coverage is not adequate for you then you should buy an extra cover to secure your family.
     
  3. Coverage for Family and/or Dependents
    One of the most important factors to consider while buying a health insurance cover is to consider family and the number of dependents. The primary goal of a health insurance plan is to take care of your finances in a time of medical emergency so always ensure that your entire family and dependents are covered. However, keep in mind that at every step always reconsider your health insurance cover.


For example, if you are planning to start a family in near future then restructure your health insurance cover beforehand so that it will cover the cost of maternity. Similarly, if you have elderly parents who have a pre-existing medical condition then it is best to estimate the cost of the medical expenses and restructure the cover accordingly. 

All leading health insurance providers offer family floater plans, a tool to cover your entire family including elderly parents. In this manner, you will be able to safeguard the health of every member of your family.

  1. Age
    Insurance whether health or life is all related to age. So, if you are young and healthy you have to pay less health insurance premiums. Therefore, it is recommended to start investing in health plans early and buy a larger cover. 

    Tip: Remember to renew it without a health insurance claim as such policies offer good benefits when the claim arises at a later stage. 

    Summary

Remember the earlier you take your health insurance coverage, the higher coverage you will get. Buying early also benefits as you have a lump-sum coverage before you get a pre-existing illness.

Thus, adequate health insurance cover is person-specific. You need to consider all the related factors closely to decide the perfect cover. An adequate Mediclaim cover for an individual is when his/her health plan satisfies all kinds of medical needs of the family without putting pressure on the finances.

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