How Health Insurance benefited a Family?

Background

With the rising cost of medical treatment, having a health insurance plan is crucial. In the absence of health insurance, one needs to make payment for medical treatment out of one’s own pocket and that can dent one’s finances. Also, even though people tend to need medical care as they grow older, one may need it even when they are younger, because medical emergencies can occur without any warning.

Mr. Singh's Case

Let us take the example of Mr. Singh who is 40 years old. Mr. Singh works in the advertising industry and is based out of Bangalore. His wife is an interior designer and is self-employed. They have one kid, daughter, aged 4 years.

Mr. Singh had bought a family floater health plan of Rs 10 lakh 5 years ago after his financial planner advised him to. When his kid was born, he included her in the floater plan for a little additional premium. Now, Mr. Singh pays Rs 27,000 every year as premium.

In the first 4 years he did not make any claim. So, the insurance company paid him a no-claim bonus of 10 per cent. His sum assured had increased to Rs 14 lakh at the end of 4 years.

In February last year, Mr. Singh’s wife needed to have a gall-bladder operation. The hospital bill was Rs 1.6 lakh, which was reimbursed by the insurance company. It was a cashless process, and the entire amount was covered by insurance.

In September, Mrs. Singh had a bout of fever and the doctors advised him to get a COVID test done. Both Mr. Singh and his wife tested positive for Covid. While Mrs. Singh got recovered at home, under treatment and medication, Mr. Singh’s fever did not come down and he had to be hospitalised at a private hospital.

Mr. Singh had to spend 13 days in the hospital before he tested COVID negative and came home. Because of PPE kits and tests and requirement for Oxygen, the hospital bill was 11 Lakh. After deducting for some expenses not covered under the insurance, the insurance company paid 9.3 Lakh. The remaining Rs 1.7 Lakh had to be paid from their pocket.

Understanding his family's Case

Such illnesses and medical emergencies can throw our lives out of gear. Coupled with that, the financial hit can be devastating. In the case of Mr. Sigh however, it ended well because he had adequate health insurance coverage. He did have to pay an amount out of his pocket but that was still manageable.

The Singhs are paying EMI for a house they had bought and even during the stressful period they could service their EMIs properly and their regular finances were not thrown out of gear. If they did not have health insurance, the entire Rs 12.6 lakh would have to be paid from their own pocket, which would have meant that they would have to dig into their savings. This would have meant that their retirement planning or planning for their daughter’s education would have been hampered.

Importance of right Premium

When you buy a health insurance policy it means that you pay a reasonable premium every year and are covered for medical expenses. At Rs 27,000 the premium works out to be Rs 2,250 per month which is the less than the cost of a family dinner. But the benefits it provides are enormous.

A health insurance plan comes with other benefits too. Mr. Singh is eligible for a free medical check-up every year. He can also claim deduction on premiums paid under section 80D of the Income Tax Act.

Conclusion

The above example shows the importance of a health insurance plan. In fact, getting a health insurance policy is the first thing you should do even before you start any investment. After all, it pays to be prepared.