When you embark on your professional journey as a fresher, financial planners often emphasize the importance of saving and investing right from the start. However, there is one crucial step you should take even before you begin investing: purchasing a good health insurance policy. The reasons for this are manifold.
Medical emergencies can strike at any time, and the exorbitant cost of treatment can quickly deplete your finances. The recent Covid-19 pandemic serves as a stark reminder of how a medical crisis can abruptly enter our lives without warning, wreaking havoc on our financial stability. Moreover, if you find yourself without a job or experience a decrease in income due to economic downturns, your savings alone may not suffice.
Contrary to popular belief, health emergencies are not limited to the older population. Even young individuals can fall ill or experience accidents. In light of these realities, the necessity of having health insurance cannot be overstated. A health insurance policy acts as a safety net during such challenging times.
One of the significant advantages of health insurance is the availability of policies that automatically reinstate the insured amount (sum assured) once it has been utilized to pay for hospital bills. This feature ensures that your coverage remains intact for future medical needs.
“It’s best to buy health insurance when you are young because with age, if you develop any health condition, it becomes harder to buy cover,” advises Kapil Mehta, cofounder of SecureNow.
While many employers provide group health insurance coverage as part of their benefits package, it is prudent to consider purchasing a personal health insurance policy for several reasons.
Firstly, evaluate the sum assured offered by the group health policy provided by your employer. “The corporate health insurance cover may not be enough to cover the family. Ignoring this aspect can prove to be very costly in case of any medical emergency,” cautions personal finance expert Hemant Rustagi.
Coverage continuity is another crucial factor to consider. Job changes are common in today’s dynamic professional landscape, and there is no guarantee that your future employers will provide the same level of health insurance benefits. Additionally, during gaps between jobs, an individual health insurance policy ensures uninterrupted coverage, allowing you to seek medical treatment if needed. By having your own policy, you are safeguarded regardless of your employment status.
Furthermore, employer-provided health insurance may have limitations or exclusions. Opting for a personal policy allows for more customization based on your specific healthcare needs and preferences. It offers the flexibility to choose coverage options, add-ons, and sum assured amounts that align with your requirements.
The question of how much insurance you need can be challenging to answer definitively, as future medical emergencies are unpredictable. However, there are guidelines to follow. Rustagi suggests starting with a cover of Rs 5-10 lakh and gradually increasing the sum assured over time to ensure comprehensive coverage at different stages of life.
Consider factors such as your personal health history, including any pre-existing conditions or potential future medical needs, as well as your family history. Analyzing family health patterns can help you obtain higher coverage at a young age, when premiums are lower and it is easier to secure a substantial policy.
Additionally, take into account your current health condition, lifestyle choices, and the cost of healthcare services in your area. “The main principle when buying health insurance is to budget for the cost of a severe illness a few years later,” advises Mehta. Diseases like cancer can impact individuals of all ages and can cost up to Rs 10 lakh to treat. Therefore, it is appropriate to consider a cover ranging from Rs 15 lakh to Rs 20 lakh to account for inflation and ensure adequate protection. Another approach is to purchase coverage equivalent to about one year’s income.
When it comes to insuring your parents, most financial planners recommend having separate insurance policies for them. This approach allows for higher insurance payouts and better coverage tailored to their specific needs. Separate policies also ensure that any restrictions or conditions applicable to parents’ coverage do not impact your own coverage as a fresher.
Your first job signifies a step towards financial freedom. To safeguard your financial future and prevent medical emergencies from becoming overwhelming burdens, acquiring health insurance is a vital tool to have in your financial arsenal. Prioritizing the purchase of a personal health insurance policy will provide you with peace of mind and security, regardless of the uncertainties that lie ahead.
