What is Health Insurance?
In a country like India, where healthcare costs are on a persistent rise, protecting your health and finances should be a top priority. Health insurance is an agreement between you and the insurer (the insurance company), wherein the latter promises to partially or fully pay for your healthcare costs against a sum paid to them (premium).
According to a World Bank report, out-of-pocket medical expenses were highest in India in 2021, amounting to almost 50% of total healthcare expenditure. This illustrates that half of the Indian population usually faces sudden healthcare expenses. Health insurance is a financial tool that prepares you precisely for this.
Health Insurance Benefits
The several benefits of health insurance can hold different meanings for policyholders with diverse profiles. It is favorable to be aware of them while purchasing to avoid any misunderstandings later.
- Insurance Coverage for Healthcare Emergencies
One of the primary benefits of a health insurance plan is that it provides coverage for various healthcare facilities. It can include regular check-up visits to the hospital as well as major surgeries. The policy terms lay down the particulars of the health insurance benefits at the time of purchase.
A desirable feature of health insurance is the cashless treatment facility. In case of emergency hospitalization, you may not have the resources available to pay the expenses immediately. The health insurance benefits ensure that you receive proper healthcare without worrying since the hospital can settle the bills directly with the insurer.
- Safety Against Rising Medical Costs
The rapidly increasing healthcare costs are a matter of grave concern. Research suggests that paying for healthcare out of pocket is one of the critical causes of impoverishment. Under such conditions, health insurance benefits have become incredibly valuable.
By including a health insurance policy in your financial plan, you can save yourself from significant financial burdens in the future.
- Affordable Premium for Young Individuals
A common misconception is that health insurance is unnecessary if you are fit and healthy. Contrary to this, planning for health insurance early allows you to spread the premium amount over the years and reduce the financial strain.
As we grow older, health issues become more frequent. Without a plan in place, medical expenses may drain your savings. Hence, it is inadvisable to wait for a medical emergency to purchase a health plan.
- Rider Protection for Various Life-Related Uncertainties
Riders enhance the coverage of a basic health insurance plan. For example, a critical illness insurance rider provides coverage against life-threatening diseases that incur high healthcare costs.
- Additional Cover Above Employer Health Insurance
Many companies offer employer health insurance benefits. However, such coverage may not be sufficient in times of a medical emergency. Having an individual health insurance plan provides additional benefits tailored to your specific needs.
- Tax Benefits
Health insurance policies help save on taxes. Under Section 80D of the Income Tax Act, policyholders can avail of tax benefits on premiums paid for health insurance plans.
- Covers Pre- and Post-Hospitalisation Expenses
Many health insurance plans cover expenses incurred before and after hospitalization, provided they are related to the cause of hospitalization. This ensures comprehensive coverage of medical expenses.
- Provides Maternity Cover Benefits
Maternity cover, available as an optional add-on, covers childbirth-related costs, including doctor visits, hospital stays, cesarean/natural delivery, etc.
- Covers the Cost of Ambulances
Many health insurance plans cover ambulance charges, ensuring that emergency medical transportation costs are taken care of.
- Yearly Checkup Benefits
Several health insurance plans include annual health check-ups as a complimentary benefit, helping in the early detection of health problems.
- Cover for Daycare Treatment
Advancements in medical technology have led to treatments that do not require prolonged hospitalization. Many insurance plans cover such modern outpatient daycare procedures.
Types of Life Insurance
Life insurance policies provide financial protection in case of the policyholder’s death or incapacity. They also allow policyholders to optimize their savings through various investment options.
Types of Life Insurance Policies
- Term Life Insurance
The term is pure protection, which offers the highest coverage for a term at affordable premiums. Here, if, within the policy term, the policyholder passes away, the nominee will get the sum assured.
- Whole Life Insurance
Whole Life Insurance–Provides insurance for the policyholder for his entire lifetime (100 years and above). The cash value grows as well.
- Endowment Plans
An endowment plan is an insurance and savings product. If the policyholder survives until the end of the term and then pays a lump sum.
- ULIPs or Unit-Linked Insurance Policies
ULIPs provide insurance with a return of principal (IIRP), meaning that policyholders can invest in indexed equity and debt funds. Using a ULIP calculator, you can estimate the returns on your investments and compare different ULIP options to maximize financial gains.
- Kids Plans
Child plans are there to provide security in the future for a child, whereby both parents are not there to support education and marriage.
Conclusion
Health insurance ensures financial security against medical emergencies, while an ULIP provides a blend of investment growth and life protection. Both instruments are essential components of comprehensive financial planning, helping individuals manage risks effectively while securing their future.
