How to build a health corpus if you're unable to get medical insurance

Also try to join a group health plan at the office, bank or one covering your professional group

A survey conducted by SBI Life Insurance, along with NielsenIQ (India), has revealed that 46 per cent of respondents bought health insurance, and 44 per cent purchased life insurance for the first time during the pandemic. In short, Indians are increasingly becoming aware of the importance of insurance.

While awareness has increased, many people are unable to get health insurance for reasons such as pre-existing diseases, past ailments, advanced age, and so on. Insurers are unwilling to extend coverage to high-risk prospects. Such people should explore self-insurance and other alternatives.

Create a health contingency fund

Make the creation of a health-care kitty your top priority. Pankaj Mathpal, managing director and chief executive officer, Optima Money Managers, says, “This should be over and above your emergency fund.” Take into account your age, inflation, and medical inflation when trying to estimate the corpus size you should accumulate.

Kiran Telang, Mumbai-based certified financial planner, says, “Most people will require a minimum Rs 5-10 lakh. Check the rates on the websites of hospitals you are likely to visit for treatment.” She suggests ensuring that those family members who can get insured are adequately covered.

Starting early is crucial. Balwant Jain, Mumbai-based investment and tax expert says, “Start systematic investment plans in mutual funds (MFs). In a few years, you will gather decent corpus.”

Experts vary on the type of MF scheme you should invest in. Stick to a liquid or a shorter-duration debt fund if you have a limited horizon of up to one year. Invest in hybrid funds if you have three to five years, and equity funds if you have seven years or more.

Enrol into group plans

The chief advantage of joining a group plan, according to Mathpal, is that underwriting tends to be less stringent. Hence, even riskier customers can get insured.

If your office provides a corporate health policy, you will manage to get cover, even if you have pre-existing ailments. Even if you have to pay a part of the premium, sign up for it. Go for a top-up if it is available.

M Barve, founder, MB Wealth Financial Solutions, says, “You are permitted to continue with such add-ons, even after you quit the organisation.”

Some insurers even allow people to port from their group plan to their retail plan on quitting their jobs.

“Some professional groups, like those of chartered accountants, company secretaries, etc also offer group insurance to their members,” says Jain.

See if there are opportunities to become a part of group covers in either the professional or the non-professional circles you are part of.

Banks, too, enter into tie-ups with insurers to offer group insurance to certain customers.

“Many banks offer customised group health covers to their account holders, depositors, and borrowers, and even fixed deposit (FD) and credit card holders,” says Mathpal.

Covers on FDs and credit cards are usually complimentary.

Buy personal accident policy

Even if a personal accident policy won’t compensate for the lack of health cover, it will at least take care of the cost of treatment for accidents and consequential disabilities.

“People who are unable to get a health insurance policy due to a pre-existing disease should immediately buy a personal accident policy. Here their income, and not their health background, will be taken into account,” says Barve.

Self-insurance as a choice

Even if you have a health policy, it will not cover exclusions and pre-existing diseases for a specific period. Every claim may not be approved. Hence, many people today voluntarily opt for self-insurance.

Anant Ladha, founder of Invest Aaj For Kal, and research head at pankajladha.com, says, “Claims tend to be rare between the age of 25 and

45 years. If you start building a health corpus during this period, you can self-insure yourself easily.”

The risk is that you may have to rely on your savings if you fall ill while you are accumulating the corpus.