How much health insurance does one need

Health insurance is a crucial financial safeguard for medical emergencies and treatment expenses, ensuring that the cost of healthcare doesn't become a barrier to necessary medical care. The choice between a Family Floater and Individual Health Insurance Plan depends on individual circumstances, as not everyone's needs are the same.

Determining the Right Coverage Amount:

When selecting a health insurance plan, it's essential to remember that the appropriate coverage varies from person to person. The needs of a young, healthy individual differ from those of a family.

How much health insurance should a childless couple have?

For instance, let's consider Mr. Singh, a 30-year-old from Delhi, married with no children. He already has an employer-provided group cover of Rs 8 lakhs. For a couple like Mr. Singh and his wife, a recommended coverage would be a Rs 5 lakh floater plan, covering both of them. If an older family member, like a mother, is added to the policy, it's advisable to have a separate individual plan for her, with a coverage of Rs 5 lakhs in addition to the floater plan. In this case, the cost of additional insurance would be around Rs 40,000 per year.

How much health insurance should a couple with children have?

Now, let's consider Mr. Kookal, a 42-year-old from Kerala, who has a family floater plan of Rs 4 lakhs covering himself, his wife, and his son, along with a Rs 4 lakh cover from his employer. In this situation, for a family of three with one child, the existing coverage is insufficient. Supplementing the employer's cover is necessary due to job uncertainties. If Mr. Kookal loses his job or switches to one without group insurance, he must have personal insurance. In this case, a coverage of at least Rs 15-16 lakhs is recommended, with the coverage increasing with the number of children.

How much health insurance should a double-income, no-kids (DINKs) couple have?

For young DINKs, having medical insurance is vital. Getting an additional cover of at least Rs 3-5 lakhs above what the employer provides is necessary. Both spouses should obtain this coverage early in life to benefit from exemptions on pre-existing diseases when changing jobs. Initially, a Rs. 3 lakh policy is adequate for a childless couple, which can be increased to Rs. 5 lakhs when children are added. Over time, they can explore more comprehensive policies, such as serious disease disability and accidental death-cum-disability insurance.

Is a low-cost policy a good idea?

Consider the case of Mrs. Datta from Punjab, who bought a Rs 2 lakh floater policy six years ago. She wanted maternity coverage and was cost-conscious. However, today, a Rs 2 lakh cover may be insufficient. It's recommended that she invest in health insurance of at least Rs 8 lakhs, which would also provide better maternity coverage, considering the high costs associated with childbirth in metropolitan hospitals.

Supplementing Coverage Economically with a Top-Up Plan:

An effective way to increase coverage without a significant increase in premiums is to opt for a top-up plan. These plans have a threshold limit, and only claims exceeding that limit are covered. A top-up plan can cover an individual, their spouse, and children, with the sum insured in their existing policy acting as the threshold.

Tax Benefits:

Premiums paid for health insurance policies are eligible for tax deductions under Section 80D, with up to Rs 25,000 for regular taxpayers and Rs 30,000 for senior citizens. If a family floater policy includes dependent senior citizen parents, the total deduction can be up to Rs 55,000.

In Conclusion:

Individual healthcare needs vary with age and medical history, and it's crucial to account for medical cost inflation in your health plan. The coverage should be increased annually to keep pace with rising healthcare expenses. Several insurers may increase the sum insured by a certain percentage each year, provided there are no claims. Consulting a knowledgeable financial planner who understands your unique requirements and family needs can help you make informed decisions about your health insurance coverage.

Author: Debalina Roy Chowdhury, Dilzer Consultants