Health insurance key to keep finances in order

Whenever we plan for future, we breakup the larger goal into various milestones that coincide with their timelines. So, the typical investment planning involves in allocating investments across the asset classes and by diversification reduce the risks.

Generally, we, humans remain optimistic and probably why we sleep well in the night, assuming we would be awake the next day. We schedule so many works for the next day, next week and so on. This is a good sign but what we assume is our continued productivity, that we would remain healthy to handle all the planned schedules.

Not all diseases are fatal but could lead to debilitating and could paralyze us temporarily. Of course, at these situations, we wouldn't be thinking about our long-term planning, etc but aggressively pursue all available means to fight it out to get back to normal.

If we're lucky and if the impairment is only temporary, we could restore ourselves to normalcy but in cases where the damage is either prolonged not permanent, recovery and getting back to normal is a long journey.

This could have an adverse impact on not just ourselves but on our dependents, immediate family and on our finances, despite the situation is only temporary. This would scuttle all the planning done till date.

We would divert the finances that we'd earlier earmarked for some other goal to ride off the current crisis. We could end up even accumulating an additional burden of debt, though temporary, if the liquidity is insufficient to cover the medical expenses.

Health insurance is, hence, a desired alternative to mitigate the risks that arise of any unforeseen health conditions. This becomes necessary when someone is not employed or switching between employments. In most of the organized sector, the employment comes up with an additional benefits of health insurance provided by the employer, though, insufficient.

The advantage is that most of these come with no waiting periods and even without much of hinges (restrictions attached) like covering pre-existing diseases, etc.

Even then, individuals should arrange for their own personal health insurance policies that could augment their existing group covers. They could bolster with top-ups on their group covers but still having their own health insurance cover for their family is always ideal.

This is because not all group covers of the employers are alike and may have variations and this would be a clear danger when switching jobs. Also, the same employer might re-work the existing cover during renewals when they find the premiums (due to the prior experience) are spiked or the insurance company might restrict certain features of the existing cover.

These are some of the persistent risks in any group cover provided by the employer. A personal (family) health insurance could then come as a biggest rescue.

Moreover, you could always retain your personal plan as a back-up and accumulate vintage and thus gain advantage of unrestricted cover as pre-existing diseases start to be covered from three years onwards in some plans.

The unclaimed years provide with bounty of features or upgrades that could even rival the group cover from the employer after some years.

All the while, the premium paid for this insurance could be claimed under section 80(D) of the Income Tax up to Rs25,000 per annum for self and immediate family. An additional Rs25,000 could be claimed if provided for dependent parents.

This could increase by additional R.25,000 i.e. up to Rs75,000 (25,000+50,000) in case of the parents being senior citizens.

The other important feature in the health policies is the comfort to port i.e. to change between service providers or insurance companies while retaining the benefits.

Portability is akin to that of the cellular network where you retain your desired mobile number while switching between the cellular service providers. Also, similar to that of opting for different insurance provider each time you renew your motor insurance where you could retain the benefits i.e. no-claim bonus, etc.

So, one could switch to better insurance product while retaining the vintage from the last insurer. There are lot many types of products available in the marketplace and consult your advisor to make a right-fit choice.

Please do remember always, only good health could buy you insurance and not great monies. So, get yourself a health insurance immediately if not covered, yet.

(The author is a co-founder of 'Wealocity', a wealth management firm and could be reached at knk@wealocity.com)