Thursday, May 26, 2016

Health Insurance must for a sound financial future

We all talk and listen a lot about financial planning and the importance of right asset allocation for Equities, bonds, gold, real estate etc. but even the best of the allocation strategy will fall apart if we are not adequately insured for life and health.

While many of us have a life insurance, though very small and inadequate, majority of Indians have no health insurance. As per recent National Sample Survey Data released in April 2016, Over 80 per cent of India’s population is not covered under any health insurance scheme. The data reveals that despite seven years of the Centre-run Rashtriya Swasthya Bima Yojana (RSBY), only 12 per cent of the urban and 13 per cent of the rural population had access to insurance cover. This poses a major threat to a family's financial future. 

Critical illness Treatment cost

Treatment costs for majority of critical illness have gone up 3 to 4 times in past 15 years. For instance the average cost of treatment for breast cancer through a private practitioner would be Rs 5-6 lakh, including investigations, surgery and radiotherapy. However, with targeted therapy, six cycles of chemotherapy can cost up to Rs 20 lakh (Source: Google search average cancer treatment cost in india). According to the World Health Organization (WHO), nearly 10 lakh new cases are reported in India every year. Assuming inflation at 6%, treatment cost of critical illness could go up by another 300% in next 20 years.

Adequate Health Insurance for all the members of the family is a must so that high unforeseen medical expenses do not jeopardize the financial health of the family. There are many private and govt. owned health insurance providers with flexible plans to suit your needs. Depending on your income and financial goals one can choose a product from an insurance company which has good track record for claim settlement and covers maximum medical centers and diseases at competitive premiums. 

Following link from IRDAI (Insurance Regulatory Development Authority of India) provides important dos and don’ts regarding buying a health insurance:

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