Health Insurance

Like life insurance, everyone needs a health insurance too. It is especially important to start one when you are young, so you can lock into lower premiums. However unlike life insurance, health insurance is useful both pre and post retirement. If you have not yet retired, the risk of not having a health insurance is that, in case of an emergency, your investments and savings will take a hit and will delay your retirement. If you are already retired, your corpus will take a substantial hit and will reduce your income stream.


There are a lot of factors to consider when selecting a health insurance. One of the important factor to consider is the sum insured. Remember the sum insured will be fixed at the time of taking the policy, but you may need that money much later in life, and due to inflation the sum insured may not be sufficient in future. The cost of medical expenses are increasing significantly every year. Just consider the following expenses as of 2018

Cancer: Rs 8.6 lakh
Cardiac diseases: Rs 9.6 lakh
Liver transplant: Rs 25.5 lakh
Kidney transplant: Rs 6.5 lakh
Source: Cigna TTK Health Insurance


My suggestion is to take at least a 5 lakh cover. With most insurances you have a no claim bonus for each year that you don’t claim anything. The no claim bonus can be up to 100% or something similar. So you will have a Rs. 10 lakh cover eventually.


Prefer a family floater plan if you are young. You can add yourself, spouse and kids and take a higher cover. For parents, go for an individual plan to reduce the risk of both parents falling ill in the same year.


Further, top-up your insurance to give you enhanced protection. Another factor to consider, is to also include critical illness cover, in addition to health insurance for those illnesses that health insurance does not cover, like cancer. Take a standalone critical illness cover and not a rider on top of health insurance.


You also get to claim tax deduction when you pay your health insurance premiums. Under section 80D, you can claim a maximum of Rs. 25,000 for premiums paid towards health insurance for you, your spouse and children. Furthermore you can additionally claim another Rs. 25,000 for premiums paid towards your parent’s health insurance if they are both under 60 years of age, or claim Rs. 30,000 if either of them are over 60 years. In total, you can claim up to Rs. 55,000.


Those are my thoughts on health insurance. But for a much better article on how to choose one, I suggest you read “Buying Health Insurance in India? Follow this 13 point checklist” on Jago Investor. Another useful article on how much health insurance cover is needed at various life stages is available on Value Research.

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