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Why health insurance is needed for a better retired life? - Outside View by PersonalFN

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Why health insurance is needed for a better retired life?
May 23, 2014

Whether you are thinking about retirement or not, all of us want a peaceful retired life. However, the idea of having a perfect retired life could hardly turn into reality for those who underestimate the role of medical insurance. Medical costs are rising by every passing day and if you are young, they would be very high by the time you retire. If you are ignorant about buying medical insurance while you plan for retirement it would be considered a mistake. Being optimistic is a good thing, but let's not forget that problems such as diabetes, blood pressure and heart attack among others erupt when one enters the second innings of life.

Today, life expectancy is rising and medical inflation is skyrocketing. Not opting for health insurance at the right time is a sure shot way of blowing all your retirement savings. You see, while you might be saving right now for financial goals and dreams which you wish to accomplish in your retirement period, medical expenses related to you or your family members can burn a huge hole in your retirement corpus and have an adverse impact on your personal finances as well.

Importance of Health Insurance

A health insurance policy also known as mediclaim is a policy which covers all medical treatment expenses up to the sum assured in case you are hospitalized due to an illness / accident. These policies are generally issued for a period of 1 year and are renewed yearly, but now some of the private companies have started issuing policies for a period of 2 years as well.

Paying for huge expenses at one go is a difficult task when you are hospitalized, but if you own a suitable health insurance policy you need not worry about such large medical expenses. Today it is even possible to insure yourself against a few life threatening diseases through riders. Having health insurance can be of great support during financial difficulties and there is no plausible reason why one should not opt for health insurance. You might think that buying such a policy or renewing your cover would be waste if nothing happens to you or your family members during that time period. However, by paying premiums in a disciplined manner and covering yourself with an adequate sum assured, you are insuring yourself against the possibility of any illnesses or accidents.

Points to bear in mind while selecting a policy:

  • Don't just buy a policy that provides you insurance cover at the lowest premium. Although premium is a vital aspect that one should consider while buying a health insurance policy, it should not be of paramount importance in your selection process.

  • Understand what is covered and what is not covered. Read the information related to sub limits on room rent, waiting period for pre-existing diseases, co-payment, network hospitals for cashless facility, pre and post hospitalization expenses, exclusions, no claim bonus and so on carefully.
Just imagine you bought a health insurance plan with a very low premium without taking into consideration all the features of the policy. At the time of claim you learn that the insurance company is not liable to reimburse you as the cause for which you were hospitalized was not covered under the policy. So you should be well aware of all the features otherwise you may find yourself in a situation where you are footing a bill for what you thought was covered.

You see, although the need for insurance usually arises in the later years of life, emergencies can occur anytime. Hence the best time to opt for a health insurance policy is now. As you age, it is likely that you develop some symptoms that might affect your insurability.

There are various companies selling health insurance policies in the market. National Insurance and Apollo Munich are examples of two such companies from the public and private sectors, which offer health insurance policies. However remember that, it is imperative to consider the aforementioned points and suitability of the plan before buying any health insurance policy.

PersonalFN is of the view that retirement planning is incomplete without an adequate health insurance cover. It not only aids you to manage your cash better during your retirement period, but also can help you live a stress free retired life.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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