The minimum health cover recommended has gone up from Rs 5 lakh to Rs 10 lakh since the COVID-19 pandemic set in. The ideal cover, however, depends on several factors, starting with where you live. Read on to find out what they are.
The unprecedented health and economic crisis unleashed by the COVID-19 pandemic has changed many an assumption about health insurance.
Many individuals today have realised the risk of relying solely on employer-provided group health insurance policies. Likewise, the inadequacy of Rs 5 lakh covers.
Moneycontrol has, over the last two years, underlined the importance of having an adequate, independent health insurance policy in place, irrespective of how old you are now. Not only in the context of COVID-19, but also to safeguard your finances against critical illnesses that can run up huge hospitalisation bills.
On World Health Day, 2023, it’s once again time to review your current health coverage, if you have not done so already.
And, Moneycontrol-SecureNow Health Insurance Ratings can be your perfect guide on the journey to choosing the best-suited policy. Here’s the lowdown on accurately assessing your health insurance needs and selecting the sum insured that suits your requirements the best.
Metro residents need larger health covers
Your place of residence is one of the key determinants of the size of your cover.
“There is a huge difference between healthcare costs in Delhi and, say, Bhubaneshwar. A large part of healthcare consumption is local. So, you should at least consider healthcare expenses in the state where you live,” says Bhabatosh Mishra, Director, Underwriting, Products and Claims, Niva Bupa Health Insurance.
Even if you do not live in a metropolitan city currently, you ought to take into account the hospitalisation expenses in the state capital.
Your requirements will play a key role
You need a higher sum assured if you expect certain facilities in the hospital.
“Are you the kind who wants an individual room to yourself or are you fine with a shared room? Or would you not settle for anything less than a deluxe room? If you want a deluxe room, then, a Rs 5 lakh cover will be exhausted quickly,” says Amit Chhabra, Head, Health and Travel Business, Policybazaar.com.
Also, if you want an exclusive room, you must look for a product without room rent sub-limits. This could mean higher premiums and also, possibly, a larger cover.
Age and health history matter
Those in older age brackets need larger health covers due to the higher chances and frequency of their requiring treatment for chronic illnesses. “Life-stage matters. At 35 and 55, your requirements will be different. As we age, we need large health sums insured because that is when chronic conditions start taking root…that is when there is increased incidence of cancers. These are expensive treatment procedures,” says Mishra.
And this is why senior citizens need covers as large as they can afford. If you are looking to include your parents in your family floater cover, it’s best not to, as the higher number of claims could exhaust the total cover for the policy year quickly, leaving other members vulnerable. Ensure that you buy a separate policy for you parents. If your parents cannot get a regular cover at affordable premiums due to pre-existing ailments, consider senior citizen policies for them.
A minimum Rs 10 lakh cover a must
Buying a large cover could take care of your requirements, besides eliminating restrictions such as room rent sub-limits, proportionate deduction and co-pay ratios.
However, you also need to factor in your affordability. A large sum insured also comes with higher premiums. So, you have to strike a balance between your requirement and your budget. “In absolute terms, a Rs 10 lakh cover is needed for everyone,” says Abhishek Bondia, Principal Officer and Managing Director, SecureNow Insurance Brokers.
He also suggests a thumb rule. “You need a health cover that is equal to your annual income. This is because a lot of ailments are linked to your lifestyle, which, in turn, is linked to your income,” he adds.
Rs 5 lakh covers are no longer adequate, unlike earlier, when families made do with them for four to five family members. “You should have covers of Rs 10 lakh per person in a family,” says Chhabra.
Do you need a Rs 1 crore cover?
Again, the answer to this question depends on your expectations from the health insurance and the kind of facilities you are looking at.
Chhabra believes the ideal cover for an individual today, budget permitting, is Rs 1 crore. “The high sum insured is not necessarily very expensive. The cost of a Rs 1 crore sum insured could be just 5-7 percent higher than that of a Rs 10 lakh cover,” he says.
However, do bear in mind that being annually renewable contracts, health insurance premiums will be hiked from time to time. In future, health insurers may hike the premiums for these covers, which could then be beyond your budget.
Also, a Rs 1 crore cover is primarily needed only for expensive treatment procedures, which are not an everyday occurrence. “Statistically, it is impossible to get 100 percent coverage. You need the level of cover that will give you confidence. Do you want to cover 98 percent of the eventualities that could happen? If yes, then maybe a Rs 1 crore sum assured would be adequate,” says Mishra.
If you are convinced about the value of a Rs 1 crore cover, but affordability is a concern, you can look at a combination of a base policy of, say, Rs 10 lakh and a top-up cover for the balance instead of buying a single, large sum insured. In the case of a combination option, the aggregate premium outgo will be lower, which is the key advantage.
On the other hand, if you are looking at premium features, then a single large cover will offer those benefits. For instance, you might need a high-value policy if you want international coverage. Most regular policies do not offer this feature, and only some premium products allow their customers to seek treatment abroad.
Finally, you need to strike a balance between the features that you want and the premium that you can afford. Always keep an eye on your future requirements too.
To keep things simple, you can start with a Rs 10 lakh cover. You can review and enhance this cover every five years to account for healthcare inflation and changes in your requirements.