Skip to main content

Risk strategies for Health coverage

RISK coverage, in the form of insurance, life and health, forms the base of any financial plan. If risk strategies are not in place, any well- thought of and well implemented plan can go awry. Most employers in the organised sector provide some sort of health benefits to their employees. There is a slow increase in awareness about having a personal health insurance. In order to cover the gaps in case of change of job or redundancy.

IS HEALTH INSURANCE ENOUGH?

Normally health cover limit from single insurer is of `5lakh. Lately some companies have increased this limit to `10 lakh per person.

But it is still discretionary and depends on the profile of the applicant. Some new entrants in the industry even provide a cover of `50 lakh. These are meant for high networth individuals as the premiums are very high and a limited number of high-end hospitals are on the panel for treatment.

Alternatively, you can take a family floater upto `10 lakh for your family. For individual covers, you can increase your cover by taking multiple policies from various insurers. The problem with this approach is that in case of a claim, each insurer will pay you proportionately. This will increase the paper-work as all bills will have to be submitted to all the insurers. Also, depending on the terms and conditions of each insurer, the premiums due for each policy can go up at the time of renewal due to the claims.

So what does a healthy young person do? He might not have a claim for several years to come. But with the kind of lifestyles today the risk of diseases like diabetes, hypertension and so on has increased tremendously. If he already suffers from any ailments, he may face a pre-existing disease exclusion period, on purchase of new policy. The exclusion period means that pre-existing diseases or conditions arising due to them are covered only after a fixed tenure as mentioned in the policy. Any claims arising due to the pre-existing diseases during exclusion period are not accepted. Even the premiums will get loaded for these pre-existing diseases. In some cases, a co-payment clause might be added, meaning that in case of a claim the insurer will pay only certain percentage of the claim, say 75 per cent. The rest has to be borne by the client.

If he takes a cover of `2- 3 lakh, it might not suffice in case of a major surgery or ailment. If he takes the entire `10 lakh limit available to him, he might be paying high premiums for several years, even when the risk is low. A `2- 5 lakh cover might be sufficient today, but in years time, due to inflation, that amount will be grossly inadequate to provide any meaningful respite from hospital expenses if need arises. By that time if he decides to get additional cover, the costs will be high and some conditions may be marked as pre-existing. Thus, both risk and cost increases with age.

In case of senior citizens, due to the age factor, there might be several heath issues, thus risks of claims arising are high. It is difficult to find insurers providing a decent amount of cover for this category of individuals. Some policies offer higher cover, but with a copayment clause. Here if your employer is providing for health insurance for dependent parents under their group insurance policy, it is an excellent advantage.

SOLUTIONS

There could be two possible solutions. Apart from the health insurance policies provided by general insurers, you can go for health plans from life insurance companies. There are several variants available in the market. These are essentially unit-linked insurance policies (Ulips). The benefits they provide are lump sum payment in case of occurrence of certain ailment as defined in their offer. The payment may be one-time for any one ailment or more than once for multiple ailments. Apart from this, there are payments available in case of hospitalisation or domiciliary hospitalisation and major surgeries. These payments are out of the fund created from the premium you pay. So the amount available will depend on the premium you pay, the option selected and market conditions. This can only be a supporting product. It can't replace the basic health cover.

The second method is to invest systematically in mutual funds to build a separate corpus for health. This is to be used only in case of health emergencies, and not for anything else. In case you have dependent parents having some health issues which might lead to hospitalisation in future, you might have to start with a higher allocation to create a sizeable corpus to be available at short notice. Creation of health corpus becomes a top-priority in such cases.

Therefore, it is always better to spend a small amount and go in for regular health check-ups. Knowing the status of your health will warn you if you are pre-disposed to certain risks. This will not only motivate you opt for a healthier lifestyle, but will also push you to be financially prepared.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

 

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver Mutual  Funds  Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...
Read more

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...
Read more

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Read more

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...
Read more

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
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