What is the right time to reevaluate your physical health? Or the health of your investments?
Try asking a doctor or a financial advisor these questions. The reply will probably be regularly. Similarly, your health insurance needs regular evaluation. Ask yourself, is your health insurance adequate for your current situation?
Good health insurance is one of the pillars on which your financial plan stands.
You may be thinking that asset allocation for investments is all there is to a financial plan. Beyond doubt, it is an important aspect of a financial plan. However, health insurance is another crucial aspect.
Read along to find out.
Investments May Not Be Able to Cover the Expenses of Medical Emergencies
Your investments grow over the years to fund your short, medium and long term goals, and these goals are foreseeable.
However, a medical emergency often comes as a rather nasty surprise. In a medical emergency, liquidating financial assets may not always be an appropriate or feasible option.
They may be locked in and not accessible to you right away. Or the financial asset may be in a short term downward phase. Sometimes, selling them in an emergency may mean endangering the achievement of a major life goal.
Health Insurance is Best Equipped to Mitigate Financial Risk in a Medical Emergency
Health Insurance, on the other hand, is designed to cover medical emergencies. A good health insurance policy is designed to mitigate the financial risk in a medical emergency, and it does so by offering the following facilities and covers.
Most health insurance plans cover pre-hospitalisation, hospitalisation and post-hospitalisation expenses. A majority of them offer cashless hospitalisation at network hospitals.
Thus, they aim to safeguard you from the financial holes caused by medical emergencies.
What to Look For While Reevaluating Health Insurance?
As you evaluate your health insurance, here are the things to look for:
Is the sum insured enough?
You may have chosen a particular sum insured while purchasing your health insurance policy. You probably accounted for your life situation then while arriving at an appropriate sum insured. However, the sum insured that was appropriate then may not be appropriate now. Read along to know why.
Changing Life Situation
You are not the same person as you were when you first bought your health insurance. Your life situation has changed. You may have got married, have children, and your senior parents may now be dependent on you. Your income may have grown. And so may have your expenses.
Medical Inflation
Medical expenses can be consultation fees, room rent for hospitalisations, cost of procedures and medicines.
Over time these items have only become costlier, especially in the last few years. This rise in medical expenses over time is called medical inflation. This leads to hospitalisations being more expensive over time.
Consider the factors mentioned above while evaluating your current sum insured. If it is found to be lacking, you may ask for revised proposals. These may be from the current insurer as well as other good health insurance companies.
Individual or Family Floater?
As your family expands, you need to evaluate which kind of health insurance is now appropriate. An individual plan is best suited for newly earning, single customers. If your family has expanded, you would need to consider switching to a family floater plan.
A family floater plan covers everyone in your family under a single sum insured. The chances of everyone in the family needing to be hospitalised together concurrently are low. Hence, insurers can offer lower premiums for family floater health insurance plans.
However, if you have seniors in the family, including them may attract a copay clause. A copay clause mandates that you pay a part of the claim amount from your pocket. In this case, it may be advisable to only have non-seniors in the family floater. You may consider specialised senior plans for the senior members.
Should you consider Indemnity Plans?
Indemnity plans are plans where the insurer reimburses the actual hospitalisation expenses of the insured. These plans do not mandate hospitalisation at network hospitals. The premiums on these plans, too, are generally lower.
However, they do not cover pre-hospitalisation and post-hospitalisation expenses. Keep these points in mind while considering indemnity plans.
Is your Health Insurance Portable?
Health insurance can be ported from one insurance company to another. You may even apply for a larger sum insured as you port your policy. It is, however, subject to approval by the new insurance company.
The new insurance company then evaluates your age, health risk, medical and past claims records. Based on these, it may propose a new policy.
However, there are a few terms and conditions which apply. You should apply for portability at least 45 days before the expiry of the current policy. The new insurer will have to convey a decision within 15 days of the application.
Reevaluate your Health Insurance Regularly
Just like your physical health and your financial health, keep evaluating health insurance at regular intervals. Ask yourself the above questions at every evaluation. At every evaluation, pick the most appropriate plan for your current life stage.
Read more about Right Time to Port Health Insurance Policy here.