Should Health Insurance Be Part of Your Financial Plan?
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An effective financial plan is about savings, investments, and protection against unexpected shocks. With proper savings, a sudden sickness or hospitalisation can wipe out your plans. Health insurance is like a safety net that covers high medical bills, so you do not need to reach into your pockets or plunge into debt.
Insurers observe that medical costs can be staggering. With a health insurance plan, you can meet these expenses without any significant financial stress. Keep reading to know more.
Health Insurance: A Financial Safety Net
Health insurance transfers the risk of high medical costs from you to the insurer. With the increase in healthcare costs, a sudden operation or a fatal disease can prove to be disastrously costly. A good health policy covers hospitalisation, daycare procedures, and other medical services.
This implies that you only pay for deductible or non-covered items, and the insurer takes care of the major bills. It secures your savings and investment corpus, ensuring your funds remain intact for education, retirement, and other objectives. Practically, health insurance will eliminate the possibility of turning a health emergency into a financial burden.
Reducing Out-of-Pocket Expenses
India’s healthcare system relies heavily on private spending. As of 2017, health accounted for about 4.7% of GDP, and nearly 7% of that expenditure was directly funded by households. This, in practice, implies that the majority of patients use their own money to treat themselves.
Health insurance shifts this burden. The insurer negotiates prices with network hospitals and contributes most of the bill (as per the coverage conditions), saving the load on your wallet.
To illustrate, a major operation that might cost several lakhs will otherwise clear off your savings; however, with the help of insurance, the money is financed, which safeguards your financial plan.
Safeguarding Your Savings
According to a report by the actuarial company Milliman, in 2016-17, 56% of Indians had no meaningful health coverage (compared to 76% in 2013-14). The uninsured cover the expenses themselves. Often, en these out-of-pocket payments are through savings or loans.
Comparatively, individuals who have health policies do not encounter this risk. The infusion of cash by the insurer in the medical care implies that your investment cash can keep increasing as intended.