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The straight forward answer to this is – without Health Insurance, Financial Freedom can never be attained!
Financial freedom is mostly connected with wealth accumulation, investments, and passive income, but one of the most crucial element of it is—health insurance.
Why?
Because life is uncertain and a single medical emergency can wipe out years of savings, push families into debt, and disrupt financial stability like hell!
Hereby, health insurance is the financial safety net, that protects long term financial goals to get derailed by the unexpected medical costs. It is something that gives peace of mind, ensuring that medical emergencies don’t become financial disasters.
How Health Insurance Connects to Financial Freedom?
1. Protection Against Medical Inflation: Medical costs in India are rising at a rate of 10-15% annually. Without insurance, hospitalization expenses can be horrifying!
2. Preservation of Savings and Investments: Instead of getting into savings or selling assets during a medical emergency, insurance covers most of the expenses.
3. Access to Quality Healthcare: With a good insurance policy, you can opt for better hospitals and treatments without financial constraints.
4. Tax Benefits: Under Section 80D of the Income Tax Act, health insurance premiums are deductible, reducing taxable income.
Indians AND Health Insurance
Despite its importance, health insurance stats in India is low. Here are some insights:
- Only 37% of Indians have health insurance, as per the National Family Health Survey (NFHS-5).
- 67% of medical expenses in India are paid out-of-pocket, leading to financial distress.
- People believe employer-provided insurance is enough, but it often has limited coverage and ceases after leaving the job.
How Should Indians Start Thinking About Health Insurance?
- Not an expense, but an investment: Medical emergencies are unpredictable, and insurance ensures financial well-being.
- Coverage over cost: Instead of choosing the cheapest premium, opt for a plan that covers critical illnesses and hospitalization expenses adequately.
- Start young: Premiums are lower when you buy insurance early in life.
- Regularly review and upgrade: Healthcare needs change with age, lifestyle, and inflation.
Common Myths About Health Insurance
1. “I am healthy, I don’t need insurance.”
But, emergencies like accidents or sudden illnesses can happen to anyone.
2. “Employer insurance is enough.”
But, this coverage is mostly limited, and the policy lapses when switching jobs.
3. “Health insurance is expensive.”
But, plans start at affordable premiums, and the cost of not having insurance is far greater.
4. “Pre-existing diseases aren’t covered.”
But, after a waiting period, most policies cover pre-existing conditions.
5. “I can buy it later when I need it.”
But, Insurance companies do not provide coverage for existing illnesses, making early purchase crucial.
Types of Health Insurance
1. Individual Health Insurance – Covers a single person.
2. Family Floater Plan – Covers the entire family under one sum insured.
3. Critical Illness Insurance – Provides a lump sum on diagnosis of serious illnesses like cancer, heart attack, etc.
4. Senior Citizen Health Insurance – Specially designed for people above 60 years.
5. Group Health Insurance – Offered by employers for employees.
6. Maternity Insurance – Covers pregnancy-related expenses.
7. Top-Up & Super Top-Up Plans – Additional coverage beyond an existing policy.
Best Health Insurance Plans for Different Needs
1. For young professionals: Individual health plans with OPD coverage and critical illness riders.
2. For families: Family floater plans with maternity and newborn cover.
3. For senior citizens: Specialized senior citizen plans with higher coverage and domiciliary hospitalization.
4. For those with existing conditions: Comprehensive policies with pre-existing disease coverage after a waiting period.
Example: How to Choose and Buy the Right Health Insurance
Let’s consider Ravi, a 30-year-old professional earning ₹8 lakh per annum. Here’s how he can plan his health insurance:
1. Assess Needs: Since Ravi is single but might start a family in the next 5 years, he should consider an individual plan with future expansion options.
2. Choose the Right Sum Insured: Given rising medical costs, a minimum cover of ₹10-15 lakh is ideal.
3. Select the Type of Policy: A comprehensive individual policy with a critical illness rider.
4. Check Network Hospitals: Ensure the insurer has a wide hospital network in Ravi’s city.
5. Look for Additional Benefits: OPD cover, cashless treatment, and daily hospital cash benefits.
6. Buy Early: Since he’s young, he’ll get lower premiums and fewer restrictions.
7. Regularly Review: As his family grows, he can upgrade to a family floater plan.
Conclusion
Health insurance is an essential pillar of financial freedom. It shields savings, ensures access to the best healthcare, and prevents financial instability due to medical emergencies. So rather than viewing it as an unnecessary expense, you must start seeimg it as an investment in their financial well-being.
With the right plan and timely decisions, anyone can secure their future and move closer to financial independence!
