Health insurance need

Why is having a health insurance policy important?

The need for a Health Insurance plan and more so, a personal health plan, independent of the company benefit insurance, is very important, and very often, people who get whisked into a hospital realize it’s importance, albeit vey late.

Adequate and Independent medical Insurance is one of the basic tenets in our financial planning process.

We mean adequate and independent, because very often, our clients come to us, saying, of course we have medical cover for us and our family sufficiently provided from the company we work for. This cover, is company owned, not owned by you and it is based on the terms and conditions the company makes with the group term insurance company, and may exclude certain privileges the independent covers can give you.

What if:

1. You plan to leave the company someday, from which time, the cover stops immediately.

2. The employer only covers for health needs within the premises of work, and not outside, and the medical emergency occurs outside the premises of work.

Why do I need medical cover independent of the company cover provided?

1. There is no concept of a no-claim bonus in a company cover, since the health cover is taken as a group health plan and therefore, the benefit of no-claim bonus is lost. This can help automatically increase the sum insured for an individual if taken independently.

2. Sometimes, the premium cost increase in health insurance would be much higher in a year, if the group covered is making claims and the insurer, considers this adverse and unprofitable to the remaining members, thus needing to increase the group premium cover cost.

3. If you switch companies and get a new heath cover, the “no claim“ of the previous employer is NOT transferable.

4. Pre-existing illness, like diabetes, cardiac ailments, cholesterol, are covered after a certain period, which would need to start at level zero, if you delay taking a medical cover after a few years or may even be denied a claim, since, it’s the pre-existing illness you are making the claim for, which has not completed its waiting period.

5. If you plan to take a cover later on in life, which is your personal health cover:

a) Premiums would be very high with increased age.

b) There would be no accrued bonus.

c) If medical test results are not favourable, then cover can be denied and you would be left with no medical cover which is a nightmare with today’s increasing medical costs.

Individual or Family Floater

This can differ from person to person and family as well.

I would recommend a combination of both individual cover along with family floater.

While, a family floater is cheaper and works on the principal, that not all family members would fall ill and need cover at the same time, an individual cover, ensures each member is adequately covered, should a medical emergency arise and more so, take care of rising medical costs and inflation in medical expenses.

Added benefits:

Some company`s, also provide free medical check up once in a year and provide for out patient medical bills, like medicines etc to be covered along with the “no claim” bonus option.

When do I need medical Insurance?

Buy medical insurance, when you don`t need it, otherwise your medical condition can deny you cover and /or have a high premium that you pay.

Government Medical cover or Private:

People are of the opinion, PSU medical companies, are backed by the government and hence are more reliable in the long run.

Some perceptions are private insures are profit oriented and have a strict claim process.

On the other hand private insurers are more responsive and more strict initially while taking the insurance, to ensure their bottom lines are healthy and not hit with bad claims.

The decision if your`s!

Other questions, could be what is the optimum sum insured, should we opt for a TPA or in house settlement, buy a top up cover, buy a simple or feature packed policy.. etc.

What you need is unbiased advice from your financial planner and we are here for just that!

(Contributed by Dilshad Billimoria BBM, LUTCF CFPCM, Certified Financial Planner and Investment Advisor)

29 July 2012