In the face of crisis or extreme situations most of us feel like our backs have been pushed against the wall, leaving us no room to wiggle. The Covid-19 pandemic is one such event that seems like it has come out of nowhere and is not only attacking our health but also our daily life and economic stability. What the current crisis has taught us is that risk is everywhere and extenuating events / circumstances can often catch us by surprise. Most of these eventualities cannot be predicted accurately. Even after the event has taken place, its ramifications can remain uncertain for an extended period of time. Thus, it is imperative that we must always be prepared. An insurance policy is one such way to prepare for extreme events and mitigate the impact of the same on our physical, mental and economic well-being. Wimbledon is a perfect example. The event has been paying a pandemic insurance premium of around USD 1.9 million every year for the last seventeen years. The total premium that it has paid over this time period amounts to USD 32 million. Now, it is set to receive a claim of over USD 142 million after the event was cancelled this year due to the pandemic. The current environment clearly underscores the importance of health insurance.
Why is it important to buy a health insurance policy?
Life is uncertain and can sometimes take a turn that might be challenging to navigate. If the turn impacts a person’s health, then it could have wide ramifications not only on the individual but also on his entire family. The cost of medical care is high. Hospitalisation and the cost of medicines can skew a family’s budget and derail their financial plan. Additionally, if the earning member of the family is the one who falls ill then it is also possible that there might be a considerable fall in household income. This becomes a sort of a double whammy where household income decreased but household expenses increase. Fortunately, all of this turmoil can be avoided simply by paying a small premium towards a health insurance plan.
Benefits of a health insurance policy
A good health insurance policy would usually cover multiple expenses related to the medical exigency. It could include the costs towards medical tests, the costs of medicines and hospitalization costs. There are certain policies that cover critical illnesses and sometimes even make a payment to compensate for loss of income incase of a critical illness. The four main benefits of a health insurance policy are discussed below.
Coverage against medical expenses – the main benefit of a health insurance policy is that it can provide the necessary monetary support in the event of a medical emergency. When faced with a medical emergency, an individual is already facing physical and mental strain. He does not want to compound that with financial strain. A health insurance policy can help a person avail the necessary medical care without having to worry about the associated costs.
Cashless claim benefit – many insurance providers also offer a cashless claim benefit. Under such an arrangement, one does not have to make any payment. The hospitalisation expenses are simply settled between the insurer and the hospital. However, this does involve some initial paperwork and requires the insured to get admitted only at one of the hospitals’ in the insurer’s network.
Critical illness coverage – health insurance has now become fairly nuanced with insurers creating products that can cater to the multiple needs of the insured. One such product is critical insurance coverage which insures the individual against critical and life threatening diseases. This can be purchased either as a standalone cover or as a rider to an existing health insurance policy.
Tax benefits – the premiums that an individual pays towards a health insurance plan is eligible for tax deduction under Section 80D of the Income Tax Act, 1961. To better understand the eligibility and quantum of deduction it is better to consult an advisor.
Another point to remember is with regard to additional protection over and above your employer cover. Many companies cover their employees with a group insurance plan. While this is a good thing, individuals should still consider buying additional coverage simply because a group insurance policy might not be customised to suit the individuals’ specific needs and also sometimes may not be sufficient.
We have all heard the adage ‘health is wealth’. The truth in this statement has been personified by the current pandemic. While many of us take care of our health by eating right and doing regular exercise we forget to protect it by purchasing health insurance. As the Wimbledon example suggests, the benefits of an insurance policy will be far greater than the premiums paid for it.