Buying a policy with high sum assured at a young age means you lock it down at a lower premium than if you buy the same policy at a later age.

The year 2020 was like none other. It was a year that not only saw a small virus change the world that we live in, but also changed our perceptions about the importance and need for health insurance. Till mid-March 2021, almost 120 million people across the world had been infected with the deadly Coronavirus which killed over 2.6 million of them. Only in India, over 11 million infections were reported by mid-March, second only to the US.

What is shocking then is that less than four per cent of COVID-19 patients in India has had health insurance coverage. And a majority of those who did have a health cover, found their coverage to be inadequate. When the Coronavirus was at its peak, the cost of a 15-day-hospitalisation at a super-specialty hospital in the national capital could have run up to Rs 10 lakh per person. And with COVID-19 being a highly infectious virus, there have been thousands of cases where whole families contracted the virus and thus needed expensive medical care, taking the collective expenses to tens of lakhs for the whole family.

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Lower Sum Insured Health Plans No More Sufficient

With a common false perception in India that a family-floater policy with Rs 7-10 lakh sum insured is enough to take care of the medical needs of a family, many found themselves in a situation where they had to exhaust their lifetime savings on their treatment, and even had to borrow money from family and friends to cover the cost. However, it is not only a pandemic that could put one in such a situation. As per the Indian Council of Medical Research (ICMR), the number of cancer cases in India could increase by 1.5 million by 2025, up from 1.39 million in 2020. Not only that, the cases of heart diseases are also rising in the country and its prevalence, along with stroke, has increased by over 50 per cent over the last three decades. Moreover, more and more cases of diabetes and hypertension are reported every day, that increases one’s risk of developing chronic kidney diseases.

While it is true that with each passing year, the coverage and effectiveness of healthcare facilities are improving in the country, the cost of treatment is also increasing at a fast pace. So, having a health insurance policy with the sum assured of Rs 5-10 lakh would not be enough to cover most serious ailments. In fact, this amount may not cover treatment of critical illnesses even today as they usually cost up to Rs 30-40 lakh in India. If one takes into account the medical inflation, which is increasing at double the rate of overall inflation, this cost is expected to double in 9-10 years. Given these odds, it only makes sense to have a higher sum assured as part of your health insurance policy.

Rs 1 Crore Health Cover – A Game Changer

To address these concerns, there are Rs 1 crore sum insured health insurance plans available in the market that provide comprehensive coverage to the customers. While you may wonder this would cost a bomb, but that is not the case. These Rs 1 crore policies are designed as a combination of a base plan coupled with a super top-up, which substantially brings down the premium for such policies. People buying health insurance plans with higher sum insured have increased drastically. Earlier, the share of people buying health insurance plans with Rs 20 lakh – Rs 1 cr sum insured was less than 5 per cent. However, the share has now increased to 50 per cent over the last 12 months. These policies are ideal for those with family history of critical ailments like heart diseases, cancer and diabetes. They not only cover the cost of hospitalisation, but also cover pre- and post-hospitalisation expenses, ambulance expenses and organ donor expenses. And all this comes at a reasonable premium amount if you buy such a plan at an early age.

Buy Early to Save on Premium

Many young people feel that they are fit and do not need such a high cover. But most of these policies cost only a marginally higher premium than policies with Rs 25-30 lakh cover. Also buying a policy with high sum assured at a young age means you lock it down at a lower premium than if you buy the same policy at a later age.

For instance, a Rs 1 crore health insurance can cost as low as Rs 10,680 per annum if you buy it at 25 years of age. However, if you buy the same policy when you are 45-years-old, it could cost you almost Rs 17,000 per annum. So people should buy a Rs 1 crore health insurance cover in their 20s and 30s, rather than waiting till they are in their 40s and 50s. Especially in today’s time when our lifestyles are becoming more and more sedentary, there is an increased risk of health issues at an older age.

(By Amit Chhabra, Head-Health Insurance, Policybazaar.com)

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