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 Health Insurance and Investment

October 2009
Time to Appraise Your Health
Anil Rego
Life being so fast and stressful, it did not surprise me when my neighbour Sonu, all of 29 years of age, was rushed to the hospital due to chronic respiratory problems. But what jolted me out of my chair was when his wife mentioned to me about how she could not bear the medical costs!

I tried to convince her that with the reputed Assistant Manager's job at an MNC, Sonu should have saved sufficient over the years to handle such crises, but the poor soul relentlessly cried her heart out. They had exhausted all their savings and the company cover - and were looking for help. I, along with a couple of Sonu's friends, pitched in our might, and the brief stint with the hospital ended for Sonu.

A while later, I paid him a visit as a kind and caring neighbour (but with the ulterior motive of getting back the money I had lent earlier) and jocularly pointed out that he needed to give his work a little rest and take care of himself. He gave me a dead pan look and said, "I am buying a health insurance, and was researching a little to find the best plans and quotes".

Cold Facts
What he had researched was interesting: the average growth in cost of health treatment is 7.5 percent, far ahead of our inflation! With the average age in India being 26 years, the health treatment costs are likely to go up drastically in about a decade's time with over 65 percent of the population entering the higher age bracket which is more prone to health hazards.

Although total expenditure on health in India is nearly six percent of the entire GDP, the government spending is less than 25 percent, as against the average spending of 30-40 percent in other developing countries.

If the average rent of a hospital room is Rs 500 as of today, in 15 years, it will cost Rs 1,479. Similarly, a surgery that costs five lakhs today would cost Rs 14.8 lakhs in 15 years. More than the disease it is the cost of treatment that takes its toll. Which simply means that your health insurance should be well planned – and with increasing job losses, this has become all the more pertinent.

Tax Benefit
An added advantage of health insurance is the tax benefits which they attract under Section 80D. The maximum amount of deduction available under this section is Rs 15,000000 (save tax up to Rs 4,635). In case of senior citizens, the maximum limit is Rs 20,000 (save tax up to Rs 6,180). This would enable Sonu to cover his dependant parents as well and claim the tax benefit! Most medical plans offer cover only till the age of 65 years at best. There also are a few plans which will offer cover till 75 years, but these are significantly expensive.

So if you are looking forward to create wealth this Diwali, one sure shot way is to invest in a health insurance. The adage 'health is wealth' is becoming easier to understand, in our times.

Product Easy Healthy Health Guard Health Saver Health Advantage Plus Medi Premier
Inpatient H
Day care
Pre Hopsitalisation (30/60) (60) (30) (30) (30)
Post Hopsitalisation (60/90) (60) (60) (60) (7%; max Rs.5,000)
PE Coverage
(2nd & 3rd) (2nd & 3rd)
Critical illness
(optional) (3)
Donor Expenses
Hosp Cash
Nursing Allowance (under OPD)
No Claim discount
Ambulance (2000) (1000) (750)
Recovery Benefit
Fund Invt
Accompanying (30 days)
Person Maternity Benefits (4 years waiting perior)
Hearing Aid
Health line
Life long renewal

Types of Medical Plans
Health insurance policies not only cover expenses incurred during hospitalisation but also during the pre and post hospitalisation stages like money spent for conducting medical tests and buying medicines. The cover will be to the extent of the sum insured. Health insurance products offer the 'cashless hospitalisation' benefit. Here one does not have to pay for the hospital bills in case of hospitalisation; the insurance company settles the bill directly subject to some basic conditions.

As a latest offering from the insurance companies, we may opt for family floater policy where under a single policy (a single sum insured level) and single premium you may get your entire family insured. This is a cost effective innovation from the health insurance companies to help fit the premium expenditure within our budget. Don't forget to take your medical insurance today lest you have to grapple with hospital bills - apart from the illness itself - on account of today's skyrocketing medical costs and the increasing medical threats. Because as they say, "Sometime we feel we don't want it, but then when we want it they don't give it!"

  • Always have an individual health insurance cover even if you are covered under group insurance policy, as once you are out of the group, the cover will cease to exist and you will get uninsured.
  • Family floater can help us to insure our family within a single premium amount and can be a good way to save on total premium.
  • Do claim the benefits under section 80 D of income tax laws on the premium you pay for health insurance.
  • At the time of choosing for your medical insurance cover, look at the major benefits like the cover ceasing age or maternity benefits, applicable exclusions, limitations, sublimits, etc.
  • Cost is not the only important parameter – a feature rich product is likely to be at a higher cost as well. Hence do evaluate the need of various features and choose a product most appropriate to yourself.
  • Make sure that you get you and your family insured at a young age.
Anil Rego is Founder and CEO of Right Horizons, an Investment Advisory and Wealth Management Company

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