These days, you would have seen so many health insurance companies pushing for ₹1 crore health insurance plans. Till just a couple of years back, this was an unheard of amount for health coverage. Mostly, this amount of coverage was popular in the term life category. But due to the health situation around the world for the last 2-3 years, there seems to be some traction for larger health covers.
But is such a big cover actually needed?
For a family of 2 adults and 2 children, I would say that a cover of ₹5-6 lakh is no longer enough. But whether they need to straightaway scale up the cover to ₹1 crore or not is something worth discussing.
God forbid if anyone in your family gets admitted into a reasonably good hospital, then it’s very easy for the medical bills to go up to a few lakhs. But cases of large medical bills that are more than ₹25-30 lakh etc. aren’t that common. Though you may have read about many such ‘evil-hospitals-charging-so-much’ stories online and via WhatsApp forwards, the fact is that they are not that common. There are tons of smaller hospital bills that do not cross a few lakhs at max.
Let’s hope no one needs to pay large medical bills that need ₹1 crore cover, but for most people, even a smaller health coverage would be sufficient.
Right health insurance coverage
This actually depends on an individual, family members, their health, family health history, etc. So, there is no one right formula for the correct health insurance coverage. But under normal circumstances, coverage of about ₹25-30 lakh would be reasonably sufficient for a family of 2 adults and 2 children.
Assuming you are smart enough to not depend solely on your employer’s group health insurance, there are a couple of ways to buy a ₹25-30 lakh health insurance cover for your family -
Option 1 (Simper but costlier) - Purchase a ₹25-30 lakh base health insurance plan, or
Option 2 (Cheaper) - Purchase a smaller base plan of say ₹10 lakh, and further increase the coverage by buying a separate Super-Top Up plan of ₹15-20 lakh, which are comparatively cheaper when it comes to premiums.
To be fair, these days due to high competition in the insurance sector, the top-ups of higher amounts ( ₹50 lakh to ₹1 crore) are also offered at competitive rates. But not everyone might still be able to afford the premiums. Also, who knows that in years to come when the insurance sector sees consolidation, the premiums for large plans may increase drastically.
But in any case, if you have doubts about what is the right cover, then it’s far better to be over-insured than being under-insured, if you can afford the higher premiums.
By the way, you need to be cautious about too-good-to-be-true health insurances. Because having a large sum assured alone isn’t enough. You need to ensure that there are no unfriendly sub-limits, room-rent limits, exclusions, etc. that make the plan not so great.
So say you have a hospitalisation bill for ₹15 lakh but there is a limit of ₹5 lakh in your ₹1 crore policy for the medical treatment you took, then you will only get back ₹5 lakh from policy. The rest ₹10 lakh comes from your pocket. In such a scenario, having a ₹1 crore cover may not seem that useful.
All said and done, don’t blindly buy ₹1 crore health insurance just because you can afford the premium now. Make sure you have gone through the policy terms and conditions so that there are no negative surprises a few years later. Even a ₹25-30 lakh cover with no sub-limits, exclusions, etc. is better than a ₹1 crore cover with too many restrictions.
So, make sure you purchase a cover in line with your family’s requirements, premium affordability, quality of treatment that you want to cover and the health history of insured members. And make sure you review health insurance once every couple of years.
Dev Ashish is a SEBI-Registered Investment Advisor and Founder (Stable Investor). He provides fee-only financial planning and investment advisory services to small and HNI clients across India.