Tax saving shouldn’t be only reason to buy health policy: Ajay Shah

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Over the past decade, owing to combined initiatives by the government, the insurance regulator, and the private industry, the reach of health coverage has increased significantly and in the right manner. However, many people are still not fully aware of the benefits of health insurance. Mint finds out more on the scenario from Ajay Shah, director and head-retail sales, Care Health Insurance:

What is the response of buyers when asked to avail of health cover?

In India, most people buy health insurance not due to conscious motivation to cover their health, but as a basic input for financial planning or they end-up following someone in their family or social circle who have recently opted for a health cover.

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According to Statista, a German company specializing in market and consumer data, health insurance penetration increased to around 35% in 2018. Of those who have some form of health insurance, three-fourths are covered by various government schemes, such as Ayushman Bharat Yojna and CGHS (Central Government Health Scheme). Around one-fourth of people were covered under a group or individual health insurance policies; with retail health insurance penetration being 3% only.

The data clearly indicates that the majority of Indians are not covered by any form of health insurance. Even in the insured population, most people do not have adequate health cover compared with the rising cost of healthcare and increasing prevalence of various diseases.

What are the most important benefits of health insurance?

The most obvious benefit of having adequate and comprehensive health insurance is that it covers the cost of treating an illness and related hospitalization across a host of diseases and ailments, at a quality healthcare facility. Health insurance covers an individual or the family against a longer hospital stay and increased cost of healthcare.

Another major reason that people end-up choosing a health policy, is that it helps them in tax savings. However, one should not buy health insurance only for availing of tax benefit. It should be looked at factoring in significant inflation in the cost of healthcare. Tomorrow, the healthcare service that we can perhaps easily afford today may become much more expensive.

What should buyers do?

Another aspect to be mindful of is that the older we get in opting for a health insurance policy, the higher is the applicable premium. Whereas, if health insurance is bought at a younger age, the comparative premium is significantly lower, and one has the advantage of completing their respective wait-periods while they are still in a state-of-good-health. Certain treatments are not covered during the waiting periods, which usually apply anywhere from 2 to 4 years from the first purchase of the policy.

It is, therefore, essential that people consciously consider purchasing a health insurance policy not only as a financial instrument or as a tax saving option but also as an avenue to protect their health, their savings, and quality of life.

Do you have a personal finance query? Send in your queries at [email protected] and get them answered by industry experts.

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