Author: Binay Agarwala, Senior Vice President & Head, Health Business & Corporate Strategy, ICICI Prudential Life Insurance
Increasing penetration of TV, mobiles and internet has created awareness in various ways to manage and improve our lifestyles. Today, information on wide ranging subjects, such as best ways to stay fit, what to do on your first date, where to eat or holiday, are available at the touch of a button. In addition, all these technologies have also enabled us to be more aware on how we can save our own hard-earned money to ensure we fulfill all our financial dreams - be it for buying a house, vehicle, providing for child's education, going on a holiday and even ensure lifestyle during retirement years. However, some of us forget to protect ourselves against healthcare expenses. Consequently, it leads to the reliance on out of pocket to meet health care expenses. During any medical emergency it often leads people to dip into their savings, sell their assets or even borrow money. Hence the expenses of the medical emergency might be met even though at the cost of compromising some other goal or aspiration.
Let me give you a simple example of how the financial situation of a household is affected due to a medical emergency in their family. In case one of the family members needs to be treated for a critical illness like cancer or organ transplant, the procedure cost alone could be more than 3 lakhs.. You must note that this is not the total cost the family has to bear for the emergency; it is only for the procedure. The total cost will include medical and hospital expenses, travel costs, lodging and boarding etc. In addition there could be other diagnostic costs, such as medical tests, doctor fees, pharmacy expenditure, and so on. Further, critical illnesses also have an adverse effect on an individual's work, thus, resulting in a temporary loss of income for him/her.
Saving for healthcare expenses
While high one time costs incurred during hospitalization can be met by purchasing a hospitalization insurance plan; there are expenses such as medicines, diagnostic costs and doctor fees which could add up to a significant amount, even though at every instance the bill is small. For someone with chronic illnesses like diabetes or those enjoying their post retirement years, these day to day medical expenses can account for a significant chunk of their healthcare expenses. The impact of such expenses is only increasing with rising costs of medicines, etc. A lot of day to day health expenses are small and frequent and are better provided for by savings rather than insurance. Hence, a health savings element could help in meeting these expenses.
Retired people face another critical challenge of trying to meet their health insurance premiums out of their fixed monthly pension. Building a kitty dedicated towards meeting health insurance premiums and funding the ever increasing day to day medical expenses, could be a solution.
This brings me to the point that a comprehensive health insurance plan can help meet medical expenses without compromising on other goals. A comprehensive hospitalization insurance policy with an integral component of savings is an ideal way to pay for both hospitalization expenses as well as other day to day medical expenses. A health savings insurance plan is designed to systematically invest money to create a health fund for tomorrow.
The health fund will help you claim for future medical expenses of any kind. While the hospitalization insurance benefit will take care of any hospitalization expenses. Typically, health savings fund is an ideal vehicle for funding small ticket, discretionary and high frequency needs, such as those for chronic diseases like diabetes and heart disease. Hence, individuals should build a reserve to manage any health-related exigency; especially for the old age, since that is the time when premiums tend to go up and policyholders may not be able to continue with the premium.
Finally, I would like to reiterate that one should plan to provide the best care to their family by buying a combination of a health savings plan, which will systematically build a health fund along with an adequate cover for hospitalization.
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