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World Health Day is being observed around the world on Monday to promote awareness about health and encourage healthy practices. On this World Health Day, it is crucial to reflect on one of the most important financial decisions for your health security - determining adequate health insurance coverage.
Understanding health insurance
Health insurance is an agreement between you and your insurance provider, where the insurer commits to covering specific medical expenses in return for a premium. Depending on the policy, this coverage may include hospitalisation, outpatient treatments, prescription drugs, preventive care, and even alternative therapies.
“Choosing the right health insurance coverage is not just about picking a number, it's about understanding your lifestyle, risks, and future needs. While evaluating your options it's important to consider your age, existing health conditions, hospital preferences, and family history,” said Pankaj Nawani, CEO, of CarePal Secure.
“A good rule of thumb is to have coverage that amounts to at least 50 per cent of your annual income, or approximately Rs 10–Rs 15 lakh for a family in urban India. With rising medical costs, even a brief hospital stay can significantly impact your savings,” Nawani said.
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Factors influencing health insurance coverage amount
To determine the right amount of health insurance coverage, consider the following factors:
Income level: A common rule of thumb is to have a health cover amounting to at least 50 per cent of your annual income. For instance, if your annual income is Rs 20 lakh, aim for a minimum coverage of Rs 10 lakh.
Family size and composition: The number of dependents in your family plays a critical role in deciding the coverage amount. For families with multiple members, a higher sum insured is essential to ensure that all members are adequately covered.
Age and health history: Younger individuals typically face lower premiums and may opt for lower sums insured initially. However, as one ages or if there are pre-existing conditions, it’s advisable to increase coverage.
Location: Healthcare costs vary significantly based on geographic location. Residents of metropolitan areas like Mumbai or Delhi often face higher medical expenses compared to those in smaller towns.
Lifestyle choices: Your lifestyle choices, such as smoking habits or engaging in high-risk activities, can influence your health risks and, subsequently, the amount of coverage you should consider.
Tips for choosing the right health insurance plan:
Read policy documents carefully: Understand what is covered and what is not.
Check network hospitals: Ensure that your preferred hospitals are part of the insurer's network.
Claim settlement ratio: Opt for insurers with a high claim settlement ratio.
Customer support: Choose an insurer with responsive customer support.
Premium costs: Balance coverage with premium affordability.
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