It’s friendship week and we’re talking personal finance, so it is about time we discuss that one thing that is most like a friend to you and the family – insurance. When we talk about Insurance, we generally mean term insurance. It is essentially a no maturity plan, meaning it offers only financial protection in case of any eventualities. That is, of course, the main point of an insurance plan. Safety. Looking out for our loved ones when we aren’t around. Sorry, that’s a tad filmi but probably quite true too.
A health insurance is, on the other hand, is a present moment friendship kind of thing. It is a type of insurance that provides safety when it comes to medical expenses. And if there’s one thing we know for certain, it is that medical expenditure only seems to rise exponentially. In inflationary times like the one we are living through, when a liter of petrol costs 80 rupees, medical expenses can be forbidding. Think of all the movies where a hero’s best friend hands over his hard earned money to the hero to save his bedridden mother. Health insurance is the friend and you’re the hero. Hero, let’s find out all about the best way you can choose your 4AM friend on this edition of our week-long Friendship Week series. My name is Rakesh, your best friend for the day, and this is Digging Deeper with Moneycontrol – Health Insurance edition.
Ashish Mehrotra, MD & CEO, Max Bupa Health Insurance says, “cities like Mumbai, Delhi etc. have high treatments costs. Hence, anything less than Rs 15 lakhs for a family of 2 adults and 2 kids would be insufficient.” This is where health insurance comes in. Health insurance is like a friend for life, lending you a helping hand when you or your family is unwell so you don’t end up penniless.
I know that sounds corny, but it is true. Health insurance is a valuable ally during tough times.
Before we look at it in detail, let’s do a brief run through of the overall health insurance scenario in the country. Current data indicates that employers account for 9% of all health related expenditure in India. On the other hand, personal expenditure accounted for a whopping 82% of all health related expenses in India. This could literally be people borrowing from friends to pay hospital bills. Now, we know health insurance is usually provided to employees by companies. It is one of the benefits we consider when looking at job perks. But overall, that’s a very small number. Just 18% of urban Indians and 14% of rural citizens have health insurance.
The World Bank estimated in 2010 that approximately 25% of Indians had some form of health coverage.
Current data also estimates that health insurance makes up only five to ten percent of all the health expenditure in the country. This industry comprises mainly government sponsored insurers and private, standalone insurers. Health insurance can be tricky to navigate. Most of us make do with the coverage provided by our employers. But many such plans have loopholes and provided limited coverage. For instance, some plans have a limit on the number of people it covers. Which is the reason many policy advisors recommend individual or family plans for everyone.