11 Apr 2014

Rupeepower Editorial Team

A Healthy Dose of Health Insurance

Given the uncertain environment and the northward trend of medical expenses, it has but become a necessity for an individual to opt for health insurance. In essence health insurance is a contract between the insured and the insurer which covers the insured against medical expenses arising out of an illness, injury or hospitalisation. In return the insured agrees to pay a regular premium to the insurer. However there is almost no consensus as to how much can be defined as adequate health insurance coverage. To some extent the health insurance coverage can be gauged by the stage of the life cycle one is at, the type of lifestyle one is leading, the responsibilities, the dependents and of course the ability to pay regular premiums.


The real importance of health insurance is realised when one enters the family life cycle. The insurance coverage in this case too is dependent on the lifestyle of the spouses, the number of kids and more importantly on the history of medical ailments on either side of the two families. While initially it may seem that a medical policy (individual or family floater) is a mere waste of money which otherwise could have been put to some other good use. A quick calculation of the no claim bonus benefit and the escalating costs of medical care each year makes one realise the folly. The same is true for a single who considers himself/herself healthy enough. Health insurance must be viewed as a future looking policy which will help minimise the out of pocket expenses (which is around 70% of the total expense).

Let us consider an example of a family of four (husband aged 40, wife and two kids). There are two options available; either opt for a family floater or opt for individual policies. If the family is at low health risk then individual health policy is a risk while the greatest disadvantage for a family floater is that if there is more than one claim in a family in a year the other family members are left with lesser cover. To get rid of such a situation a mix of the two can always be availed: get individual plans for yourself and spouse and a floater plan to cover your children.

The following is a representative comparison of the premium for these policies for a family of 4 members, husband and wife and 2 children.

Sum Assured
Individual Plan Premium
(1 plan each for 4 members)
Family Floater Premium
(for 4 members)
Rs. 1 lakh
Rs. 5,294
Rs. 2,234
Rs. 2 lakh
Rs. 10,368
Rs. 3,811
Rs. 3 lakh
Rs. 14,560
Rs. 4,754
Rs. 4 lakh
Rs. 18,530
Rs. 6,226
Rs. 5 lakh
Rs. 21,619
Rs. 7,583

Health insurance is a must, be it from a family perspective or be it for an individual who claims to be healthy and has no history of medical ailments For example an individual, aged 30, could opt for a health insurance policy to have a minimum basic coverage of up to Rs.2 lakhs.

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