What is the need for health insurance?

A surgery today costs several thousands of rupees and sometimes several lakhs. Take the case of a heart surgery- It would easily cost upwards of Rs. 1 lakh. Are you prepared to bear expenses of this quantum? Medical expenses are on the rise and the suddenness of the expense sometimes puts the family in a financial crisis. Insurance companies offer ‘health insurance’ which will take care of your medical expenses in times of medical emergency.

What is health insurance?

It is an insurance policy which covers you and your family against any medical contingency. The insurer agrees to provide a health cover of a specified amount at a pre-determined premium.

In India, health insurance is popularly known as mediclaim insurance. This product is primarily offered by general insurance companies and now there are pure play health insurers players too operating in the market of the likes of Star Health& Allied, Apollo Munich Health insurance and Max BUPA Health insurance. Life insurance companies also cover some aspects of health through riders on the policy.

1. Increase in Life span coupled with medical inflation: On an average, individual life span has increased because of better medical facilities and increase awareness. But at the same time, medical expenses have increased substantially. This makes it difficult to rely on savings.

2. Lifestyle issues: Incidence of medical problems has increased because of poor eating habits, higher stress and lack of adequate sleep. This has increased medical expenses.

3. Avoid financial crisis in the family: Health related issues are not predictable and hence you cannot plan. All of us save for the rainy day but one is never sure if that amount is enough to tide over a medical emergency. Diagnosis of a serious health problem can cost large sums of money which may result in financial trouble in addition to the emotional set back.

Most people tend overlook a health insurance policy because they treat the premium paid as an expense if there is no claim in a particular year. Turn the table and imagine that you have a health insurance policy and your diagnosed with a problem which is covered by the policy- Would you still treat the premium paid as an expense? You are paying for not having to worry about sudden medical expenses; in effect for ‘peace of mind’.