Why Medical Insurance Matters – The New Indian Express
Express news service
First the caveat – I do not sell any insurance – medical or life. This article was triggered by a young friend who recently received a bill for Rs 76 lakh and has no idea who is going to pay.
Yes you are right, the coverage of Rs 76-lakh is NOT what you and I will ever get, but this person had 3-lakh – which is too low anyway!
He is an entrepreneur in the field of social media. He doesn’t want to go to the SM to ask him for money – that’s going to destroy his image, right?
What I suggest to everyone (especially for entrepreneurs with a start-up) is to take (say) basic coverage of Rs 5-7 lakh, critical illness coverage, supplemental insurance and super -up – all together totaling Rs 50 lakh. Term insurance coverage, of course, should cover all loans, spousal retirement, child rearing, marriage, and other lifestyle needs. Lifestyle needs could mean tennis lessons, swimming lessons, etc.
Medical insurance is a complicated business – with a supplement, a super supplement, a revolving policy, critical illness, etc. – so please engage with an agent. The agent will help you with documentation, complaints, medical examination, etc. In the case of term life insurance, I strongly advise you to go directly online.
Remember whatever you do with cancer insurance – remember it won’t cover diagnostic tests, travel, transportation, lost caretaker wages, lifestyle changes, etc. So to cover all of this I suggest you start with a separate SIP of Rs 7,500 per month. You should name it “SIP medical fund”. What it does is it mentally prepares you to spend that money in an emergency.
Suppose a family member has cancer (or liver or kidney failure) – it slows you down mentally and emotionally. Suppose you have Rs 25 lakh medical coverage – Basic, Float, and Super Top-up coverage. You also have company coverage from your company which covers “exceptional trauma” up to Rs 10 lakh.
None of this will cover diagnostic testing and loss of income. Let’s say that this shortfall is Rs 3 lakh. If it has to come from a “generic” fund, you will feel the pain much more! However, if your “SIP medical fund” said Rs 9 lakh – you will feel less bad. Of course, it’s psychological, but then. Your discussion with your family will be like, “I have saved money for such emergencies. And you know what. I have Rs 9 lakh in this fund, and we only need 3 lakh to be funded, so not that bad!
If you’ve never withdrawn money in distress, you won’t appreciate it – but preparation of the mind is just as important. I’m sure you know someone who’s been touched by cancer (or liver disease) – talk to them. Ask them how they prepared mentally, physically and financially. You will hear horror stories of dramatic changes in lifestyle. It cannot be avoided, let’s just try to be better prepared. Hope this never happens to us. Never.
Insurance is good, but it doesn’t cover anything. What you can do is Save. Invest. Make sure and, of course, pray that you never need to call the police.
PV Subramanyam writes at www.subramoney.com and is the author of the bestselling “Retire Rich – Invest C 40 a day”.