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In today’s fast-paced world, many young professionals have a high appetite for risk when it comes to health. Younger individuals have started to understand the power of compounding in personal finance and as a result, they see the emergence of direct mutual funds and SIPs as financial instruments to save better for the long term. In the midst of this, opting for personal health insurance is often looked at as another financial product rather than a necessity. This leads to a major reliance on the employer’s corporate insurance rather than a personal health insurance policy.
Also Read: Affordable Health Insurance Sees High Demand, Employer Policies Not Sufficient: Report
Unfortunately, this coverage may not always be enough to cover all the expenses and can lead to financial strain in unforeseen events of medical emergencies.
Furthermore, an additional challenge faced by young professionals is their inclination towards immediate gratification rather than long-term savings. Focusing on pursuing immediate personal/career goals often precedes setting aside funds for future contingencies.
Consequently, the prospect of investing in personal health insurance is often disregarded, as young professionals prioritise present needs and ambitions over future uncertainties. However, this mindset can leave them vulnerable to significant financial burdens in the face of unexpected health issues.
Another category of young professionals consists of entrepreneurs as well as self-employed freelancers. For these individuals, the need to allocate funds for business growth and sustenance takes precedence, leaving little room for consideration of long-term health protection.
Moreover, unlike their counterparts in traditional employment, these individuals do not have the luxury of corporate health insurance. Therefore, it becomes imperative for them to secure health insurance.
By doing so, they can protect themselves from unforeseen medical expenses and maintain financial stability and safeguard their physical and financial well-being.
As a young professional when you are starting out in your career, it’s important to understand the distinction between corporate and personal health insurance. This understanding will help address the healthcare needs more holistically and plan the overall finances which will alleviate the financial burden during the initial stages of one’s career with limited income in one’s pocket.
Here’s how one can differentiate between corporate insurance and personal health insurance:
1. Improved and added coverage – Many corporate insurance plans offer limited coverage with lower coverage amount and other conditions like copays, sublimits resulting in significant out-of-pocket expenses for medical care. Personal health insurance allows individuals to tailor the coverage to their unique needs, providing more comprehensive coverage.
2. Relief from rising healthcare costs – Having personal health insurance can give an individual the peace of mind and financial security. In the event of a serious illness or injury, personal health insurance can act as a safety net, protecting the customer from the high costs of medical care.
Alternatively, if a customer prefers not to choose an individual health plan, they have the option to select a top-up health policy in addition to their current corporate health plan. By opting for a top-up health plan, individuals can protect themselves from unexpected costs that may arise if they surpass the coverage provided by their corporate health policy during a claim.
3. Flexibility for Life choices: Reduced dependency on employee health cover – One may often experience job transitions to seek growth opportunities or change industries or proceed to higher education or startup a business on their own. During these transitions, there can be gaps in health insurance coverage leaving individuals vulnerable to unforeseen medical expenses. By investing in personal health insurance, one can ensure continuous coverage and mitigate the risk of facing financial hardships during job transitions.
4. Get the advantage of lower premium – Age plays a critical role in deciding insurance premiums. Young policyholders are charged a lower premium than older customers. This ensures that in future when they contract any lifestyle disease, it is covered right away without having to worry about increased premiums or restrictions to coverage.
5. Tax benefits – Premiums paid towards personal health insurance are eligible for tax exemptions under Section 80D of the Income Tax Act. This provision allows individuals to save taxes, with potential savings taxable income of up to 75,000. By investing in personal health insurance, individuals not only secure their well-being but also avail themselves of significant tax advantages, contributing to overall financial health.
Understanding the importance of personal health insurance is crucial in safeguarding oneself against unforeseen medical expenses and having greater autonomy over healthcare choices. It is advisable to conduct thorough research on multiple insurance policies, compare their features, benefits, and costs, and comprehend how each feature impacts claims and the sum insured before selecting a plan. Assess personal healthcare needs and select a policy that is most suitable and provides sufficient coverage.
Further, it is important to keep a few things in mind when opting for personal health insurance –
Understand the policy’s waiting period, exclusions, co-pays, room rent limit and disease sub-limits to avoid surprises during claims settlement. Ensure to check the policy thoroughly before purchase
Choose a policy with the right coverage amount because it should be enough to cover medical expenses in the event of a serious illness and be prepared for the increasing medical inflation
Before selecting a plan, look at the insurer’s claim settlement ratio, which indicates the percentage of claims settled by the insurer
Look for policies that offer cashless hospitalisation that can save customers from the hassle of arranging funds during a medical emergency
Declare all pre-existing conditions at the time of policy purchase. Insurers reject a significant percentage of claims even after several years of premium payment because they can determine that the customer did not declare the medical condition at the time of purchase
In conclusion, a personal health insurance is a valuable investment for young professionals, offering specialised coverage, protection during work transfers, and tailored benefits which will keep their overall other investments to not get diverted to healthcare costs at the time of need. It provides comprehensive coverage, greater control over healthcare decisions, and financial security, complementing the benefits of employee health insurance.
-The author is VP – Retail, Acko. Views expressed are personal.
Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Readers are advised to check with certified experts before making any investment decisions.
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