How to Decide How Much Health Insurance Do You

  April 12, 2019

How to Decide How Much Health Insurance Do You Need?

Everyone who thinks of buying health insurance comes across this dilemma – how much insurance should I buy? A short answer would be – enough to pay for the medical expenses in case of a chronic illness or an unexpected injury. Yet, most of us are unable to determine the exact amount we should buy for our health coverage. Unlike car and home insurance where you can put a value to the asset you’re insuring, you can’t put a price on your and your family’s health. If you’re going through the struggle of determining the right amount for your health insurance, we have some valuable tips for you

1. Consider Affordability

Compared to Rahul, a successful entrepreneur at 35, Gaurav is starting out his career as a DJ. So, Rahul can afford a higher premium on his health insurance but Gaurav may not be able to pay more than a few thousands. For instance, though both of them would like to get a cover of over Rs. 10 lakhs, Gaurav might have to start with a cover of Rs. 3-5 lakhs and then increase his coverage as his salary increases. Start your coverage with at least 2% of your annual income as premiums and keep increasing it as you move ahead in your finances.

2. Look at Your Family History

If you have a family history of lifestyle diseases, you might be at a higher risk. It is always recommended buying large health insurance at a younger age to protect yourself in the future. Diseases like high blood pressure, diabetes, cancer, etc. can be expensive to treat in the long run. Don’t wait till you contract the diseases to get your coverage. Genetically high-risk candidates should always apply for insurance when they are healthy and young.

3. Factor in Your Age

One of the most important aspects of determining how much coverage you need is to consider your age. If you’re 25, you’re a lot less likely to get diseases than someone who is 65. You can buy health insurance with lower coverage when you’re young and healthy since you have fewer pre-existing diseases. As you age, the cost of your coverage increases and you might not even get coverage for some pre-existing diseases. You can start with a cover of Rs. 5-10 lakhs and increase it once your income and age increase.

4. Think About Your Life Stage

Pramod, who is 38 and married with two kids will need a better family floater policy compared to Yatin, who is 36 and unmarried. If you’re buying insurance for yourself, you can opt for a lower coverage amount. When buying for your spouse and kids or your aged parents, it’s always better to choose a higher amount of coverage. A family floater might also help Pramod to manage a single plan compared to four different plans.

5. Contemplate Your City’s Impact on your Health

It’s best to start saving for your retirement from the day you start earning. Sure, you want to enjoy your 20s and live life to the maximum. However, it is the best time to start investing in the right financial products as your risk-taking ability is considerably higher. Plus, you get a lot of tax benefits and can get maximum gains on compound interest too.

5. Research Before Major Financial Decisions

As medical science has advanced, it is more likely that you will survive a lifestyle disease after medical treatment. Unfortunately, urban residents are at a higher risk of certain diseases due to their lifestyles. Families living in urban areas should have a minimum floater plan of Rs. 10 lakhs along with the maximum top-up available. If you live in a city known for higher pollution levels or you live in a town that’s known for certain epidemics, you might need a higher coverage than someone who lives in a city that’s less prone to illnesses. You should also consider the hospitals in your city and their average medical bills to understand the kind of financing you would need in case of an emergency or a critical illness.

There is no thumb rule to decide how much health coverage you would need. Luckily for you, Finnovators has years of experience and expertise in understanding customers and analysing their needs. Our insurance advisors will be ready to discuss your priorities and suggest the right coverage as per your family and income. And above all, we’ll always be there for you in times of any medical need.