Company health policy is sufficient, personal policy is not necessary
This is one of the most common mistakes we have come across from people who work in the corporate sector: they rely on the group policy offered by their company and do not have personal coverage. They don’t realize two things: First, an office policy is only valid while they work at the company, and any period of unemployment leaves them vulnerable without health insurance. And second, there will come a time when they may not be working (at least in a business) and by then it may be a bit late to get personal health insurance, whether health or expense.
Always take out private health insurance, even if you have company health insurance.
To keep costs down, you can also use the basic cover and top-up concept. As long as you have business insurance, you can invest in an add-on policy (beyond the first Rs 2 lakh) and buy basic insurance at a later date when you run out of business insurance. This significantly reduces the premium.
Not enough health insurance
Gone are the days when coverage of Rs 5,000 was enough for the family. A minor operation on the same day at a first-class, but not first-class, the private hospital can cost around Rs 40,000. Based on the experiences of friends and clients over the past two years, an average of Rs 75,000 to Rs 1,000 per day for serious illness requiring hospitalization is the minimum you should be prepared for. The cost of extended critical care will be much higher.
So now we require clients to take out family health insurance for at least Rs 20-25 lakh.
Taking the health insurance not early enough
Generally, people do not buy health insurance unless they are required to do so. Maybe the bonuses seem prohibitive or you think “okay with me, I don’t need it”. But people don’t realize that it’s better to have health insurance when you’re healthy than to cover yourself when you’re not. In most cases, once you realize you need it, you end up paying higher premiums or, worse, being uninsured.
It’s best to get insurance early when premiums are low and use floats to keep them profitable.
A good family car is an essential prerequisite for your personal financial journey.
It may seem counterintuitive, but people always make the mistake of not disclosing past health problems or current habits, perhaps to save on premiums. Remember that in case of hospitalization, none of these secrets will help, since the treating doctor needs to know the truth. If you discover such a discrepancy, the policy will eventually void and you will lose your coverage.
It is also important here that there is a proper exchange of information between the insurers and that previous denials/claims must be disclosed, otherwise, the policy may become void again.
Not reading the fine print
Insurance policies are often not comparable due to different exclusions/inclusions and more importantly the type of facilities one is entitled to while in hospital. Some policies place limits on room costs and the type of room (single, double, or dorm) you should be comfortable with. Such policies can be cheaper and more profitable when purchasing a policy that is acceptable, but not at the expense of basic comfort. So before you shop around, make sure the features and benefits are reasonable and you’re not underpriced or oversold.
Disability due to serious illness and accident
Good health insurance will cover hospital costs if you are sick. However, serious illnesses or unfortunate accidents often lead to long work stoppages, which can affect both costs and revenues. These are not covered by normal health insurance companies. These are risks that most people do not consider.
We also recommend contracting critical illness insurance (where a lump sum is paid if a specific serious illness occurs with a certain severity, regardless of hospital costs) and disability insurance in case of a personal accident (where a weekly sum is paid or monthly) in To be considered as income replacement in case of certain serious accidents that cause prolonged incapacity for work, also independent of hospital costs), in addition to individual health insurance
Maintain an emergency medical fund.
Last but not least, despite the best health insurance, there are always expenses that are not covered. This is especially true if you have elderly members of your family for whom health insurance premiums are prohibitive and come with a multitude of exclusions. We have learned that even more in the last two years of the Covid-19 pandemic.
Therefore, we have begun asking our clients to maintain a certain amount of an emergency medical fund in addition to the general emergency fund they maintain for job loss and other emergencies.
To combine two popular quotes: “The first wealth is health because you cannot enjoy your wealth unless you are healthy.”
Protecting your health and that of your family from possible threats, not only today but also in the future, is one of the first steps a smart investor should take on their personal financial journey.