How Much Health Insurance Cover Do You Need?
It becomes difficult to address something like how much health insurance cover do You Need? You are an individual, a separate entity and somehow there cannot be a universal rule that can say that you need Rs 5 Lacs or your friend needs Rs 3 Lacs of health insurance cover.
Your responsibilities, requirements, means to meet the ends, age, gender, pre-existing aliment etc form important factors to decide your health insurance cover but it goes without saying that these factors and situations cannot be same for all individuals. However, if we go by experts and the thumb rule then your life insurance cover should preferable be 8-10 times your gross annual income but the same thing cannot be said pertaining to health insurance covers.
However the analysts do say that going by the cost of healthcare and surgeries if you are putting up in a small or mid-sized town than anything ranging from Rs 2-3.5 Lakhs may prove to be a good amount and if you are residing in a metropolitan city then your cover should somewhere be in the range of Rs 4-5.5 Lakhs
Nowadays, many companies provide their employees with medical cover and if your company is covering approximately Rs 2 lakh for you then you should opt for another individual health cover for approximately Rs 2 Lakh taking the total to Rs 4 Lakhs.
This is the case when you are single with no dependents but you can top up your plan with family floater plans if you have a family or you may also get your spouse included in your cover if you are newly wed.
Till the time you are not privileged to bear all the healthcare expenses in a lump sum from your own pocket it is always advisable to have sufficient health insurance cover in order to meet the foreseen and unforeseen medical related issues that may come up in future and disturb your apple cart. You cannot ignore the possibility of surgeries and their cost along with routine check-ups, minor illness, prescription coverage, emergency room visits etc while you plan for your short-term as well as long-term health insurance needs.
Following pointers may someway help you in calculating or deciding upon the limit/extent of health insurance cover –
- Keeping in mind your Income – You cannot lay your hand on any and every health insurance policy that comes your way. Before you answer how much health insurance cover you need you need to answer how much actually you can spare from your earnings to pay the premiums. Obviously higher the risks cover higher the premiums. I may feel that I need Rs 20 Lac of health insurance cover but here one has to understand whether they have the means to do so. You cannot put in all your savings in health insurance programs as you have other responsibilities to take care of.
- Calculate the percentage of your income that may suffice as health insurance cover – Let us begin this with an example – I may feel that I earn Rs 5 Lakhs and I should have health insurance cover of Rs 5 Lakhs. And someone else with an income of Rs 10 Lakh may find Rs 10 Lakh cover as a decent figure but we need to frame an upper limit for the same. Someone might be earning Rs 60 Lakhs but do you think having Rs 60 Lakhs as health insurance cover would be a wise move? Depending upon one’s income, the cover may vary – for someone it may be 100 percent of their income while for others, 50 percent or less of the income may serve as sufficient cover. Again, this as well depends upon how much you can invest but be sensible enough not to get over-insured.
- Expenses – Your past expenses on health care may also form a basis of answering how much health insurance you need. For example, if someone has spent Rs 3 Lakhs in past 4 years on health care, he would aim at having a higher insurance cover for himself and his family. Someone who has not spent even a penny on health care in past 4 years would be reluctant in opting for a high cover healthcare plan. Thus, your past expenses on health care may also have an impact on your decision of buying your health cover.
- Rising Healthcare Costs – We can, in no way, ignore the rising healthcare costs. With healthcare costs rising big time, your calculation on how much you may require if any unforeseen illness strikes you or your family, would surely affect your health cover. In this case averaging the bills of hospitalization and medication may be of help. For this exercise you may pen down top ten reasons for which people are hospitalized and the expenses incurred by them on the treatment. Averaging the bills may help you in setting your health insurance cover.
- Your Call – Ultimately, you are the master of your life and well being. After analyzing your position and paying capacity, only you can decide for yourself as to how much health insurance cover you need. No one can step in your shoes and decide for you. This has to be your call.
Contributed By: Megha Sharma |
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Megha Sharma works as a guest lecturer in Delhi. She holds an MBA & Doctorate from the UPTU. With extensive knowledge and experience in various financial products, she also works as a consultant in banking & finance domains wherein she offers advice to her clients in managing personal finance. | |
