A study conducted by the Institute for Health Metrics and Evaluation, University of Washington, revealed that two-thirds of healthcare spending in India is out-of-pocket. According to former IRDAI chairman T.S. Vijayan, out-of-pocket medical expenditure constitutes 62% of the healthcare costs in India. Also, it has been found that because of this out-of-pocket expenditure, 7% of the population is pushed below the poverty line every year. So, what’s the solution to cut out-of-pocket expenses and prevent slipping below the poverty line? Simply, a good Health Insurance Policy.

Why Health Insurance?

A health insurance is a prudent financial instrument that gives you the financial muscle to bear costly healthcare expenses. More importantly, it safeguards your finances and savings from drying up during treatment. Some of the major advantages of availing a health insurance policy are:

• Prevents erosion of savings

As most people spend their savings on treatment costs out of their own pocket, it wipes out their savings and jeopardises critical financial goals. They may also default on existing liabilities such as loan EMIs, resulting in penalties, further denting their finances.

However, with health insurance providing the much-needed financial support, it prevents erosion of the accumulated wealth for addressing various life goals.

• Gives the opportunity to avail quality care

A health insurance policy gives the opportunity to avail the best possible care. Sometimes patients fail to avail quality care due to lack of funds. However, a health plan makes sure you get the best treatment under the watchful eyes of expert doctors and caregivers in a reputed hospital.

• Bear high costs of treatment of critical ailments

Treatment costs of critical ailments such as cancer, kidney failure, and cardiovascular disease can run into lakhs. Also, these ailments need prolonged treatment and can impair a person’s earning ability. Health insurance plans, especially critical illness plans, help you bear the astronomical costs of these ailments.

Unlike regular health plans, which are indemnity plans covering only hospitalisation costs, critical illness policies are fixed-benefit plans which give a lump sum upon diagnosis of a critical ailment. These plans cover pre- and post-hospitalisation costs. You can also opt for a critical illness rider and attach it to your base policy for comprehensive protection.

• Stops you from sliding into a debt trap

A robust and good health insurance policy prevents you from sliding into a debt trap. There are instances of families borrowing from friends and relatives and even lenders at high interest rates to bear expensive treatment costs.

However, this pushes them into a debt trap, coming out of which is difficult and time-consuming. With health insurance providing the required funds, your family can stay away from this trap.

• Bear overseas medical treatment costs

A value-added benefit provided by health insurers, known as medical repatriation/evacuation, this gives you the required funds to bear treatment costs faced overseas which are pretty expenses. There are occasions when patients need to go abroad for treatment because of dearth of required facilities. This benefit also comes handy when faced with a medical emergency while travelling abroad.

How to buy Health Insurance?

You can buy a health insurance policy offline, online or via third-party. Health insurance plans for family are available as floater policies where the entire family is covered under a single policy. Even if you are covered under a group policy, it’s advisable to opt for a standalone health insurance plan. Apart from the monetary benefits, the premiums paid for health insurance policy qualify for tax exemption under section 80D of the Income Tax Act.

A cost-effective risk management tool, a health insurance policy not only keeps your family financially independent during a medical contingency but also ensures your other financial goals are on track.