Health insurance and the 20-something-year-old are never attracted to one another. It feels like an avoidable expense (No one expects to get sick in their 20s), it feels expensive (No returns? No growth) and it feels unnecessary (everyone has health insurance at work).
But as the pandemic has demonstrated for many, buying one's health insurance isn't optional, even for someone in their 20s. Health cover from work might not prove adequate to cover hospitalisation expenses, and these last couple of years have proven that illnesses and accidents don't discriminate by age, and there isn’t much we can do to control, or even influence, these occurrences.
Health reasons aside, here are key financial reasons why you need to think about Health Insurance now, even if you're only in your 20s.
It is cheaper
When you're young, you can get a much higher insurance cover at low premiums. Insurance premiums are calculated basis the likelihood of claims, and this is where your age works in your favour. Also, remember that inflation in medical costs has trended higher than overall inflation. By the time you're in your 40s and 50s, getting adequate cover might become prohibitively expensive. So the earlier you start, the better.
You get better deals
When you buy health insurance when you’re young, you are unlikely to have any ‘pre-existing diseases’ and there is a higher chance that, if and when, you develop a disease, your health insurance might cover it. Exclusions can become increasingly expensive, particularly when we talk about critical illnesses like cancers, or chronic illnesses like diabetes or kidney disease.
It's a long term product
Insurance plans often have waiting periods to prevent insurance fraud. For instance, buying a maternity cover after one is pregnant is unfair to all those customers who have been paying their premiums for longer than 9 months! So when you buy health insurance when you're young and healthy, you'll have served all the waiting periods! So should you need surgery, prolonged hospitalisation, or specialised treatments down the line, you'll be just fine.
Make the most of your no-claim bonuses
For each year that you make no claims, your sum insured increases. In that way, not only is it cheaper to buy insurance young in the first place, but it also keeps getting cheaper (especially) for higher covers because you're far more likely to have no-claim years when you're younger.
It helps you better manage your health
A sedentary lifestyle has led to increased occurrence of lifestyle disorders involving heart, cancer, lung conditions and stroke, claiming younger lives. For those of us who live in cities, environmental pollution is another risk factor. Since health insurance policies offer annual health checkups, it allows you to nip the disease in the bud. Most also offer preventive services including counselling, screenings, and vaccines.
It leads to stronger financial planning
It's one less thing to worry about. Health insurance gives you the confidence to invest in your financial future without having to worry about the "what-if" situations. Should the unforeseen happen, your health insurance will take care of it. No need to derail your financial plans, no need to break FDs or even slow down on your SIPs!
Group insurance is never enough
If you're still thinking that the health insurance plan your workplace offers will be enough, think again. Check the insurance cover, and then check how much it costs to be hospitalised for just a week for a regular illness (not Covid!). Also, remember that the cover at work isn't customisable. It may not cater to your specific needs or those of your loved ones.
Focus on wellness
There are innovative covers that encourage you to stay healthy by incentivising healthy behaviour. In some cases, they may even return 100 per cent of the premium.
So, think about it now.
Insurance is for the things we don't see coming, or don't want to think about. But even the best-laid plans can be waylaid. With a little forethought, you can sidestep the worst of it. Research your options, consult your family and loved ones and invest wisely. Insurance may not look like an asset, but it functions like one when you need it. Invest in one and it will be a partner for life - taking care of your health and healthcare expenses over a lifetime without worrying about waiting periods, adequacy of cover, and coverage for chronic conditions that one may acquire in the future.
Anuradha Sriram is the Chief Actuarial Officer at Aditya Birla Health Insurance, a multinational conglomerate involved in the selling of all kinds of health insurance policies in India.