How to hedge your risks against health hazards

The last thing on your mind at the beginning of a new financial year is planning for your health hazards, but then, couldn't the need for it arise for anyone, at any time? Often the insurance plan from your employer will take care of the hospitalisation expenses. However, there are other expenses of 'out patient' nature that you and your family need to plan for during the year.

For out patient expenses

These days, the stress levels are so high and the environment so full of possibilities as far as infections are concerned that there are bound to be those niggling problems that everyone has to live with on a daily basis. Often excessive stress brings some of these problems to the forefront and one may need to make a visit to the doctor and pop a pill or two.

If you were to go back and look at these bills, they would run up to a sizeable amount for a year, hence it makes sense to plan for the same.

Set aside a small per cent of your net earnings on a monthly basis and when this amount becomes a sizeable corpus you could move it into a short term fixed deposit / fixed maturity plans.

As you age, higher should be your 'coverage'

When you are young, there are less chances of suffering from critical illnesses. But you would still need other forms of insurance such as personal accident cover, particularly if you drive a bike / car.

As you grow older, there are more responsibilities that set in, and greater are the chances of critical illnesses. Therefore, as you grow older it becomes essential to expand the coverage to insure against all possibilities; this would, in turn, enhance your cover and the premium.

Additional insurance

Today it is fashionable to jump from one company to another in search of 'better prospects'. Often during such jumps one tends to overlook the fact that there might be no insurance cover during such transitions.

A lot of families suffered during the 2008 debacle when many people lost their jobs. During this time, the stress levels were significantly high and considering that they no longer worked with a company, there was no health cover available too!

Many would have had to use up their severance pay and investments to cater to medical expenses. This reiterates the importance of additional insurance apart from the one provided by the employer.

Furthermore, the hospitalisation costs are spiralling at a rapid pace and holding on to just your company insurance cover may prove to be detrimental if your bills outrun the cover provided therein.

Type of policy

Floater plans may be ideal if you want to cover multiple people, however, the umbrella cover should be such that it offers optimal cover for each individual member.

Individual covers would make sense only if each member of the family prefers to avail tax benefit individually. The key to choosing the right health insurance is the coverage in terms of various aspects of the hazards and covering for a longer term, today there are plans which offer cover till the age of 99 years.

One can also choose from the numerous health insurance plus investment plans that are available now. The part of the premium that gets into the investment plan would build a corpus which could be utilised during the later years to cater to ad hoc medical expenses.

Tax benefit

Section 80D provides deduction for medical premiums paid for self and family to the extent of Rs 15,000 per annum. An additional Rs 15,000 per annum can be claimed if medical policy is availed for parents (if your parents are senior citizens then it would be Rs 20,000 per annum).

Hope this helps you plan ahead for your health expenses and hedge your health risks appropriately.

Tips for the week:

• Plan for out patient medical expenses too
• Increase your coverage and include critical illnesses gradually
• Avail a separate medical insurance policy in addition to the one provided by the company
• Use a floater plan which will enable each member of the family to have ample cover
• Avail tax benefit