As medical expenditures are sky rocketing with every passing year, medical insurance is fast becoming a must for every household. As the need for healthcare insurance is becoming evident, almost all of us are faced with two questions – What would be the right health insurance plan for my family? And how much health insurance do I need?
Representational image. Reuters
Let’s address the first question, what would be the right health insurance plan for my family. For this please understand there are two types of health insurance plans – mediclaim policy and medical payout policy.
Mediclaim policy reimburses you the cost of medical treatment either as a cashless bill settlement at the hospital or via reimbursement of bills submitted. Basically speaking your medical expenses are reimbursed.
Medical payout policy or loss of income policy also popularly called hospital cash policy, give you a cash payment for the event of hospitalization. This policy is not towards treatment costs but gives your instant cash if hospitalised. This type of policy is aggressively mis-sold as mediclaim which it is not.
Now coming back to the main question — how much insurance cover do I need — well unlike term life insurance there is no set formula like annual salary x 8 for amount of cover, but I follow some very basic rules in my advise. And I have followed a small formula sheet to calculate the amount of health insurance needed:
There is a simpler formula also which I follow as a thumb rule, which basically is derived from a simple fact: find out the room rent of a the normal hospital were you will go for a medical treatment * 200 is the Sum Assured in your health policy.
Taking this as an example: an upwardly mobile person living in South Mumbai should take a minimum Rs 6 lakh Sum assured of individual health insurance or a family floater of Rs 8.3 lakh for a family of 4.
Similarly in Jaipur the sum assured will get reduced to Rs 3 & Rs 4 lakh respectively.
Most of us end up taking a very small sum assured policy, my advice however is that you must always opt for the right amount, a little extra will not hurt as much as a lesser cover when it comes to medical costs.
Let’s look at some of key features, which must be included in your mediclaim policy:
1. Pre hospitalization & Post hospitalization treatments costs should consider at least 60-90 days of pre-hospitalisation and post-hospitalisation costs.
2. Daily cash benefit
3. Free health checkup benefit.
4. Coverage of pre-existing diseases
5. Maternity cover inbuilt into the product
6. Coverage of non-allopathic treatments or alternative medicine treatments.
7. Critical illness rider
8. Discount on claim free renewal
9. Renewability of product – a life long renewable product is best suited.
A quick comparison between Individual Mediclaim vs Floater Mediclaim plans is give below
However, there can be a few drawbacks to family floater plans too. The price of family floaters generally depends on the age of the eldest member of the family. As the age of the eldest member rises above 48-52 years, the premium can shoot up.
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Thus a family with eldest less then 45 years should opt for Family Floater
