Individual Health Insurance Vs Corporate Cover Vs Contingency Fund: Which one should you have?
Individual Health Insurance a good financial plan is the one that reduces uncertainties.
In reaching financial goals by providing adequate cover for health contingencies.
The Covid-19 pandemic has made it clear that not only the senior citizens but also the young people are vulnerable to getting sick.
Not only Covid-19 but the vector borne disease Dengue also causes more fatalities in the younger generation than the older one.
So, no one can predict when one may get ill and need hospitalization that needs huge expenses.
Moreover, once a person is detect with some disease that needs hospitalization.
Insurance company would provide the person an insurance cover especially for illnesses relate to that disease.
So, to protect the savings and to avoid financial strain one should get a cover against the medical expenses related to hospitalization.
A good financial plan is the one that reduces uncertainties in reaching financial goals.
Provides adequate cover for health contingencies but to cover your health contingencies.
What should you do create a contingency fund, depend on corporate health cover ?
Let’s compare the benefit & limitations of contingency fund, corporate cover & individual health insurance:
For unforeseen emergencies, one should have some cash readily available.
This may be done by keeping some cash at home & some in savings bank account & some in breakable FDs.
But one can’t estimate when the person himself/herself or his/her family members will get sick.
what would be the cost of hospitalization & how recurring will be the need of hospitalizations.
So, creating a contingency fund is essential, but due to many uncertainties related to illness & hospitalization needs.
One can’t depend only on contingency funds for health expenses.
Corporate Health Cover
It has become a common practice for the corporates to provide a minimal group health insurance cover to their employees.
However, to avail additional cover, an employee needs to pay for the extra cover.
As the corporates have bargaining power & such corporate covers are generally able to provide higher benefits compared to an individual health cover.
However, the free corporate cover may be less than sufficient and more importantly.
The cover will cease as soon as an employee leaves the organization after retirement or for another job.
As the chances of getting ill increases with age & it will not only be difficult for a retired employee to get a holistic health cover after retirement due to age.
But may also become ineligible to get a cover in case he/she already starts suffering from some diseases.
So, one may enjoy the health cover provided by the employer but should never solely depend on it.
Get an individual health insurance cover without waiting for the onset of some diseases.
Individual Health Insurance
Getting an individual health insurance cover is must everyone especially if there is no other lifelong cover like CGH Scheme etc.
Even if one has a contingency fund and corporate health cover already in place.
This is because a contingency fund may get exhausted in one or two hospitalizations.
A corporate cover will cease once you leave the organization but you will be eligible to avail the benefits.
Individual health insurance cover repeatedly by renewing the policy lifelong.
As there is no specific age of becoming ill & it’s better to take an individual health insurance cover at an early age.
One may argue that the chances of getting ill is lower at lower age.
So why should a person pay a premium without an apparent need of hospitalization very soon.
Apart from the fact that there is no certain age for sure that a person will not become ill, the other benefits of getting an individual cover early are
Taxpayers get tax benefits on health insurance premium u/s 80D of the Income Tax Act.
The limit of tax deduction u/s 80D currently is Rs 25,000 for self & family for individuals below 60 years of age.
No Claim Bonus:
Many insurance companies provides enhanced cover up to the basic sum insured as no claim bonus for each claim free years.
So, in case 10 per cent no claim bonus is provided for each claim free year.
An individual health insurance product & the cover will get doubled if there is no claim for 10 years.
For a Noble Cause:
Insurance claims are paid from the insurance pool created by the premium paid by the policyholders.
So, if you take an individual health insurance cover at an early age without an apparent cause of hospitalization soon.
You would be doing a charity by paying premium thereby indirectly helping the person.
This is because the premium paid by you would be utilize to settle the claim of another policyholder who need hospitalization.
Unless young people also take insurance cover & the amount of health insurance premium would become very high.
As a limited number of people would contribute to the insurance pool & while the number of claims would remain the same.
Extensive Coverage :
Health insurance plans in India not only cover you for hospitalization expenses.
But also provide cover against critical illnesses, accident-related, maternity, consultations, check-ups.
Other such medical expenses with different types of health insurance plans.
Peace of mind :
If you are secure on the financial front, then even a trip to a hospital feels a little less stressed.
Having a medical insurance gives you the peace of mind that can help you relax in a tense situation.
With so many health insurance plans in India offered by health insurance companies in India to choose from.
You can certainly choose the best health insurance plan from among them.