Skip to main content

Medical Insurance: Must for a healthy financial future

Without adequate cover, you may have to dip into savings or borrow, in case of emergencies

It is almost a cliché to say medical costs have rocketed over the years. We all tend to spend a lot of time and grey cells on how to save money for the future to fulfil our various goals like children's education, retirement, home purchase and others. We generally don't give as much thought to medical exigencies as required. Considering, if one does not have a proper medical cover, expenses on medical emergencies can drain out his savings and even put a person in debt. This means your entire future can get compromised by not having a proper medical cover. Medical emergencies don't announce themselves in advance before striking. Therefore, the only thing to do is to be prepared.

For this, you must start by assessing how much cover would be required and look at the probability of covering most events. A `5 lakh cover for an adult should cover 85 - 90 per cent of medical situations. The right approach would be to transfer risk by taking an appropriate medical insurance cover and being prepared to spend if expenses overshoot the same. We generally recommend individual medical covers. A normal medical insurance policy covers hospitalisation and also includes an exhaustive list of day care procedures. They also cover domiciliary hospitalisation and pre- and post hospitalisation medical expenses. In some cases even hospital daily cash and health check-up expense reimbursement may be included. These days most policies allow cashless settlement of all the claims.

Depending on the policy, there could be coverage for some atypical expenses like maternity, dental or even eye care procedures, coming into effect after a certain number of policy years have lapsed. Before selecting a policy, one needs to clearly understand its benefits. Premium alone cannot be the sole consideration for choosing the policy. Claim settlement is of paramount importance. If your insurer of choice has a history of processing claims fast and the policy benefits, too, are good, this insurer's policy should definitely make it to your policy shortlist.

There are people who prefer floaters, which are comparatively cheaper. The benefits are similar, but there is one umbrella cover for the entire family. For a smaller premium, one will have to assume higher risks.

Many who are employed enjoy cover from their employers. This would be a group insurance cover, that generally tends to be more beneficial than a general medical insurance policy. The latter covers pre-existing illnesses from day one and maternity benefits on an immediate basis. Some of these may also allow coverage of parents, who may not otherwise be eligible for medical covers. Some of these policies also allow one to pay further premiums and increase the cover. The premium in a group medical insurance policy are also lower as compared to normal policies.

There is one major downside to it though this cover ceases when one leaves employment. Today, when people are mobile and change jobs frequently, this can become a problem. When a person is in transition from one job to another, there may not be any cover at all. This is a pitfall of depending on a group medical cover. Also, the next employer may or may not have a medical cover as comprehensive. Hence, it is always a good idea to have a separate medical cover, even if you already have one. The separate cover can be at an appropriately lower level.

There are several additional covers like critical illness cover, hospital cash, surgical covers, accident covers and so on. Typically known as riders, these provide additional benefits but are not must haves. There is no end to the extent of security you may want. Whatever choice you make, make it carefully, after considering your needs and premium outgo.

1.        Prior to buying medical insurance, start by assessing the cover needed and look at the probability of covering most ailments

2.        Build a corpus to foot expenses if medical cover falls short

3.        Choose a medical cover based on premium outgo, claim settlement record of the insurer and policy benefits

Riders such as critical illness cover, hospital cash and accident covers provide additional benefits
 

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...
Read more

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...
Read more

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...
Read more

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...
Read more

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now