Health before Wealth

Health Insurance: The need of current times to provide for future

In the hectic lifestyle of today the common man uses various safety measures to tackle accidents, illnesses, contagious diseases; but no one can fully protect from these dangers. They come as an unpleasant surprise and then various tests, treatments, medicines and at times even surgery becomes unavoidable. If one spends from own pocket i.e. from existing savings for these contingency then there is a question mark over funds saved for future requirements like retirement. These type of large expense can put a family in financial risk. This is where health insurance protects your future savings.

What is health insurance?

If a person is admitted to hospital for minimum 24 hours then the reimbursement of the expenses is called health insurance. The health insurance also covers small treatments or surgeries like cataract, dialysis, nurse charges, doctor fees, medicine, ambulance etc are covered even though the 24 hour admission is not applicable.

Health Insurance is not for profit but for reimbursement. Health Insurance premium are to be paid only once in a year. Premiums are in annual mode only. The premium paid is not refundable. We are expected to cover all members of the family.

Health Insurance Benefits

In case of network hospital which is listed with the insurance company the policy holder can take benefit of cashless scheme. i.e. the insurance company pays directly to hospital and the policy holder does not have to pay anything. In other cases the insurance company pays the hospital and claims reimbursement from the insurance company. The policy holder can claim money for treatment prior to 30 days of hospitalisation and of 60 days post discharge from hospital.

Before you buy health Insurance

Health Insurance should be bought at the start of working life. Health Insurance should be bought when you don’t need it. When you are young and fit health insurance is not expensive. That time the premium is also less and we can get wider coverage. As age increases the premium also increases. Also if you are having any illness or disorder then insurance company does not cover for that particular illness and complication arising there off for a particular period.
Many health insurance companies now have entry age which shows that as your age increases and you are nearing retirement you may not be able to buy health insurance at all.

Also in younger age one benefit from NO CLAIM BONUS and which can be accumulated.

Avail tax benefit but don’t buy health insurance for saving tax

Under sec 80 D of income tax one can get deduction of Rs. 15000/- towards premium paid and another Rs. 20000/- for premium paid for dependent parents. While buying health insurance always consult a professional health insurance advisor who is knowledgeable. Analysis the brochure before you sign on dotted line.

But my Company has bought mediclaim for me!!!

Employers provide basic cover which is normally inadequate. It remains constant and there is no “no claims bonus” in group insurance. In these days of rising medical costs, the employer provided cover proves inadequate.

Secondly, as cost control measure your employer may reduce or completely stop your insurance cover.

Thirdly, there is possibility of your changing job, downsizing by company or in case of retirement there is sudden loss of insurance cover.

Forthly, many times Employer provided group insurance has “co-pay” or “deductible” clause by which you have to pay part of claim.

There are two types of insurance limits :

Individual limit : where each member of family can have different monetary limit as selected by policyholder.

Floater limit : Combined limit is given to all family members. Here any one or more family member can claim expenses upto combined sum assured.

If no claim is made during a year the sum assured increases by “no claim bonus” which is upto 35% of sum assured. Nowadays some companies give discount or other benefits in lieu of no claims bonus.




Specialised Health Insurance

These are specific policies designed for people suffering from specific disorders like Diabetes or illnesses like Cardiac issues.

Critical Illness Insurance

These policies pay lumpsum on the first instance of listed critical illness like Heart Attack or Cancer. These policies provide cushion for maintenance of health after contracting diseases which need longer treatment.


Fixed Benefit Health Insurance

These type of policies give fixed benefit in case of hospitalisation. This is not linked to actual expenditure but is a predetermined amount.

Health Insurance in short :

Lifelong protection for hospitalisation
Available to all family members
Premiums eligible for tax rebate
Useful part of financial planning
Accidents also are covered
Useful at all major hospitals
Provision for large cover
Necessary and unavoidable
Regular free health check ups

Start Saving to begin investing

Today we see plethora of investment avenues. We get attractively worded SMSs, whatsapp messages, Emails and telephone calls asking us to invest in shares, mutual funds, lands and what not. Many times we get a feel that the entire universe is conspiring to take out money from your pocket !!!



While there are N number of financial advisors telling you how to make money hardly is there anyone who actually tells you how to save.



Only those who save will be able to invest is the simple mantra.



Most important thing in financial planning to first decide your goals.



Unless the destination is decided one can not plan the journey. Now to plan the journey one must first get together all the resources required to start the journey.



This analogy exactly applies to realising your dreams.



Every young couple must sit together to plan their dreams. This will be done by using simple software like MS Excel to plot your monthly expenses. When I say monthly expenses one has to take average of annual expenses also like vacation, term fees of children, bonus payable to maid servant, Diwali shopping etc. Those who also want to plan capital expenditure should take into account house painting, replacement of car, household equipment like Refrigerator and Washing Machine etc.



One all expenses are tracked like this, please apply the MINU principle to it.



M stands for Minimum or Mandatory Expenses

I stands for Important Expenses

N stands for Nice Expenses

U stands for Unrequired expenses



Mandatory and Important Expenses can be delayed but not avoided. Nice Expenses make you feel nice when you spend but they actually can be reduced or delayed. Unrequired expenses are those which can be completely avoided.



Please decide which expense falls under which category.



This simple exercise done together will decide how much you can actually save from your income.



Use this weekend to plan your dreams.