The days of purchasing a Rs 3–5 lakh health insurance policy for your family are long gone. While the ideal amount for health insurance is still up for dispute, insurers are already aggressively marketing Rs 1 crore health insurance coverage.
A few years ago, term life insurance contracts were more commonly linked with sums of Rs 1 crore. It is still. But now, health insurance is also jumping on the Rs. 1 crore bandwagons. But is it really necessary?
Is a health insurance policy for Rs 1 crore truly necessary?
A Rs 3-5 lakh cover is obviously insufficient right now, but it’s questionable if a Rs 1 crore cover would be useful. As you may have occasionally seen via social media, hospital bills may get very expensive.
However, if you calculate the probability, the situation appears somewhat different.
It happens very infrequently that hospital bills reach that level. In India, it is unusual for hospitalisation bills to exceed Rs 20 lakh. Even though you may occasionally read about these expensive bills and assume they are normal, the truth is that you also rarely hear about the much more typical lesser costs.
Don’t misunderstand me. I’m not claiming it’s impossible to accumulate a big medical debt. Although we all hope it never comes to that, it is a possibility. But the likelihood of that occurring is slim.
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How much medical coverage is required?
There is no proper option in this situation, albeit it is preferable to have more insurance than not enough. Is it not?
But in reality, a cover of Rs 20–25 lakh is typically enough for a household of two adults and two kids. Such a cover can be used in one of two ways:
- Choose a basic plan for Rs 20–25 lakh.
- Choose a base package with a lower price tag, like Rs. 10 lakh. Then, improve it by adding Super-Top Up insurance for at least Rs. 15-20 lakh.
The second choice will be more affordable because top-ups are much less expensive. For coverage above the advised Rs 25 lakh, you can even choose a larger base plan and higher top-up. However, the basis for determining the scope of your coverage should be the cost of the premium, the standard of care you require, and the health status of the covered individuals.
Even if having a larger cover is helpful, not everyone will be able or ready to pay the price. Instead of being influenced by what commercials tell you, stick to a basic insurance plan for your family and top it off with a Super Top Up plan if the premium for an Rs. 1 crore cover is out of your price range.
It’s noteworthy to note that certain insurers are now offering very affordable Rs 95-lakh/Rs 1-crore coverages. These are typically combo plans, in which the insurer combines a base plan of Rs 5 lakh with a top-up of Rs 95 lakh.
To be honest, there is no wrong in accepting a health insurance plan for Rs 1 crore if the charges are reasonable given your salary and budget.
However, if you take a closer look at these Rs 1 crore plans, things are not so bright. You should exercise some caution:
Things to think about before purchasing a Rs 1 crore health insurance
- Although you may currently be receiving it for a very low price, premiums will rise as the insurance industry’s competitive environment stabilises. And occasionally, significantly. So keep premium affordability for a Rs 1 crore cover in mind going forward. You never know; after a few years, insurers might discover that these Rs 1 crore health insurance policies are not profitable for them and drastically increase premiums.
- After a few years, the products might occasionally be withdrawn. In that case, the insurance will present you with generally more expensive choices to relocate.
- A large sum assured isn’t enough. You also need to check the sub-limits, etc. that the cover has for various diseases, room rent limits, medical expenses, exclusions, etc. Once you understand these, the Rs 1-crore cover may not actually seem like a Rs 1-crore cover at all. For example, if a particular disease has an upper cap of Rs 5 lakh within a Rs 1-crore policy and your hospital bill is Rs 12 lakh, then you will have to pay the difference of Rs 7 lakh from your pocket in spite of having a large cover.
Don’t get drawn in by the aesthetically appealing amount of Rs. 1 crore. Make sure you fully comprehend the policy and its restrictions before purchasing this health insurance coverage or any other.
As was already said, a base or base + top-up insurance of Rs 25 lakh would usually be sufficient. However, are you the right cover for this? It depends not only on your particular medical needs but also on how much insurance you need to feel comfortable. So, proceed as such. Every two to three years, make sure to assess the sufficiency of your health insurance.
