Deciding Upon How Much Health Insurance Cover Do You Need?

Keeping in view rising cost of medication and hospitalization Health insurance has become an important component of your financial plan. It is very true that an immediate medical emergency can actually ruin your long term financial goals but the most serious question that need to answered is the amount of health Insurance one should looking into?

You always know that the money that goes into premium of a health insurance plan doesn’t accumulate as savings if the cover in the policy is not utilized during your life like any life insurance plan but still it is important. It is a mandatory spending that one should look into as a part of the household budget and it is an important part of your risk management strategy of your financial plan so that without getting affected by uneven expenses that arise out of a health emergency you reach all your financial goals.

Though truly speaking there is no thumb rule by which you can decide upon what is that amount of health cover one should look into but for doing so you should look at answering few important questions

  1. Does it depend just on my health conditions?
  2. Is my current job profile or my household income has any relevance?
  3. How much my family history of diseases plays an important role?

There may a lot of other questions which we might try and answer the question of the amount of health cover so let try and answer the few important thing:

  1. How much my current income matters?

Practically speaking you should always have a cover which should be something close to 50% to 100% of your annual income. The amount of cover would decide the amount of premium that you need to pay. Looking at the aspect of having a good financial life you spending towards your needs or what you call as mandatory expenditure should be not more than 50% of your annual income and of which the health insurance premium is also a component. Another aspect of looking into it is 50% of the annual income plus 100% of last 3 years of medical expense already incurred which can be considered as a benchmark to decide upon the health insurance cover.

  1. How much you can pay?

Trying to answer this you should look at your family budget but you should not ignore it. As per your affordability you can have a low health cover at the starting of your age and in fact during the early ages you are always healthy and hearty so a lower cover of Rs.2lacs would be able to suffice your medical emergency and will also cost you less and as your financial conditions improve and you grow in age when the amount of cover required also increase you can increase your cover accordingly. So depending on your affordability you can plan the health cover accordingly and without getting into any financial stress.

 

  1. How much your family health history is important?

You technically can’t give an exact factor to it but it is important. If your family has a history of lifestyle diseases then there is high probability that the same would be transferred to the next generation. So genetically if you fall into high risk category then you should always look at having an higher health insurance cover for Family.

In case if you feel there is a high probability of contracting a particular disease due to family history you can opt for specific disease cover.

  1. Age:

Your age in an important factor deciding your health insurance cover. At an early age you can have a lesser amount of cover but as you grow old with the rising health complications you should always increase your health cover. There is no specific formula relating amount of health cover with the age but to say by the age of 40 you should have the highest health which you might require as per future health condition because post the cost would be very high and many pre-existing ailments will not be covered and which is very dangerous once you have crossed the age of 60.

  1. The quality of health services that you intend to use

The pricing of health services taken from different hospitals can be quite different because there is no regulation in the country which standardizes the same as in some developed nations. So you should always this thing in mind while deciding upon the health cover.

Technically speaking there is no thumb rule that can help you decide the amount of health insurance cover that you make but it is always mandatory. You can plan it better so there it doesn’t creates problem when you actually require by comparing different plans online and check for effective add on cover to suite your needs.

A better planning for Buy Health Insurance Online policies now can lead to a better financial health in the future.

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