Millennials are often criticised for prioritising consumption over future savings. So, no wonder, it is widely believed that millennials do not invest in insurance. However, a recent poll by one of India’s top insurance providers (Source: Business Standard) revealed that many millennials are aware of the importance of a strong health insurance plan and actively contribute to it.
Most young people understand the need for extra money on hand, especially during a medical emergency. The COVID-19 outbreak was a wake-up call for people of all age groups to invest in a robust health insurance plan. If you are a millennial and are confused about things to consider when choosing either a health insurance plan or critical illness insurance, then this article is for you. Keep reading for all you need to know about choosing the best health insurance.
Table of Contents
What is Health Insurance?
Health insurance, often known as medical insurance, offers financial protection in the event of a health-related issue. It covers hospitalisation expenses, cost of treatment, daycare procedures and more. A health insurance plan is essential for protecting your health and assets in the current pandemic situation. It also helps you reduce your tax liabilities. A health insurance policy document is a legal agreement between the policyholder and an insurance provider, or insurer. An electronic payment system or reimbursement procedure may be used to claim these treatment costs.
Understand the Various Kinds of Plans
Health insurance policies come in several forms. Some plans assist you in obtaining complete coverage in addition to covering hospitalisation costs. You can opt for the best coverage as per your requirements by being aware of the many health insurance plans available in the market.
There are three types of standard plans:
- Indemnity Health Insurance Policy:This health insurance plan covers your actual medical costs up to the amount covered, either cashless or by reimbursement. Everyone must have at least this minimum level of health insurance.
- Top-up Health Insurance Policy:As the name implies, this health insurance plan supplements your current coverage. A top-up plan is ideal if you have health insurance with a low sum insured or corporate health coverage, and want to expand coverage without paying much.
- Fixed Benefit Health Insurance Policy:Unlike the above plans, which pay for medical expenses on an as-needed basis, this insurance plan offers lump sum benefits and gives you all your money at once.
In addition to the standard plans, you may buy critical illness insurance policies, specifically designed to pay for the expense of treating life-threatening conditions like cancer.
Critical Illness Insurance
An ordinary Indian household cannot afford the lengthy and costly treatments needed for specific critical illnesses. This is where critical illness insurance helps. It covers expenses related to treating conditions such as cancer, heart attacks, renal failure etc.
Who Should Get Critical Illness Insurance?
- Those with demanding occupations:High-pressure occupations strongly correlate with acute diseases. According to several studies, people working in stressful circumstances are more likely to get serious illnesses. Therefore, those who work in stressful environments should get critical illness coverage.
- People above 40 years of age: You are more susceptible to severe diseases after you turn 40 years old. It makes sense to get a critical illness cover insurance plan in your late 30s. In addition, individuals are more likely to have a better financial situation and no trouble paying their insurance payments.
- Individuals having a history of severe disease in their families: If a severe illness runs in a person’s family, their chances of contracting it are high. Therefore, taking precautions is crucial. Persons with a family history of acute diseases should get critical illness insurance .
Know about the Deductibles and Sub-limits
Deductibles and sub-limits are standard features of health insurance plans, which restrict your coverage. Thoroughly study the policy conditions to detect such restrictions and avoid purchasing such plans. You need to pay a percentage of the total expenditures out of your pocket that exceeds the policy limits. There can be restrictions on the cost of a room, ICU fees, ambulance services, in-home care etc.
Get a Separate Insurance Policy for Your Parents
It is better to buy a separate policy for your parents and not include them in family floater plans. Reasons are:
- Because your parents are the oldest members of the family, the insurance provider will base the premium on their age. This means the price of insurance as a whole would go up.
- You may be unable to accrue NCB (No Claim Bonus) if they have illnesses and often file claims. So, it is better to have a separate insurance plan for them.
- You can reduce the taxable amount by up to Rs 25,000 each fiscal year if you pay the insurance premium for your parents. The amount will go up to Rs 30,000 if your parents, or one of them, is above 65 years of age.
Choose Riders to Enhance Coverage
To increase your coverage, all health insurance companies provide a variety of riders and add-ons. By paying an extra charge, you may choose riders based on your needs. Popular riders include cover for a critical sickness, accidental death, maternity coverage etc. The particular risks not covered by your standard health insurance policy can be covered using the right rider.
Know the Tax Benefits
Health insurance is a tremendous tax-saving tool in addition to paying medical expenses. As per Section 80D of the Indian Income Tax Act, you are eligible for tax savings on the insurance premium up to a maximum of Rs 25,000. An extra tax advantage of Rs 25,000 each fiscal year is available if you buy insurance for your elderly parents (over 60 years of age). If you get health insurance, you may lower your yearly tax obligation by up to Rs 50,000. Section 80D of the IT Act lets you deduct the cost of annual preventive health check-ups from your taxes. Every financial year, you are permitted to deduct up to Rs 5,000 as costs associated with preventive health examinations.
Conclusion
The monthly payment does not just determine the usefulness of a plan. Consider co-payment options you must make for covered treatments and deductibles when comparing plans and other factors. It is also critical to inquire if you will have the benefit of visiting any doctor or medical facility. Some insurance plans control premium expenses by limiting the number of such medical services. Spend time learning about health insurance’s basics before buying coverage, and then choose the one that fits your needs. Although you may be young and in good health, medical crises may happen anytime. Health insurance plan coverage can help you be ready for such uncertainties.
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.