A good percentage of millennials are aware about the benefits of good health
and adequate medical cover, but a large percentage still looks at health insurance as a tax saving
instrument. A recent ICICI Lombard survey of 1,400 young people in the age group of 25-35 years had 75% of
the respondents saying that they had health insurance.
But 46% of the buyers said that the tax deduction on health insurance premium
was what made them buy the health cover. The quest for tax benefits was more pronounced among female
respondents, with 64% citing it as the reason for buying the cover. The survey findings show that most
people buy insurance only to save tax and not for the benefits it offers.
Even so, they are still better off than those who do not buy any insurance at
all. Many people are oblivious of the risk they are exposed to if they don't take adequate health
insurance. Though there has been a rise in demand for health insurance products, India continues to have
the highest levels of under-penetration in the world, with only 0.16% of the total population insured for
health, as per Irda. Little wonder then that 70% of healthcare expenses are met from one's
Take the case of Noida-based Mohit Kumar. He has been advised to buy a family
floater plan worth Rs 10 lakh, which will cost Rs 15,000 annually. However, his busy work schedule has kept
him from buying the policy. Kumar should know that he can purchase a health policy online. All it will take
is 30-40 minutes and some amount of effort to key in his details.
Mohit Kumar, 30 yrs, Noida
Family: Self, spouse and mother
Existing health cover: Group covers from employer Rs 8
Recommended cover: Rs 5 lakh floater plan for both husband
and wife. Separate individual cover for mother for Rs 5 lakh.
Cost of additional insurance: Rs 40,000 per year
Health insurance is a necessity
The good news is that awareness about the need for health insurance is on the
rise. Most of the respondents to the ICICI Lombard survey said they knew about the need for health
insurance. But insurers say some myths need to be shattered first.
For instance, half of the respondents of another survey by Max Bupa thought
that health insurance is for the old and 48% thought they don't need it since they are healthy. Many were
also bullish about their ability to foot post-retirement health bills as they believed they have enough
savings to sail through.
Many are still unsure about the benefits of health insurance. Hence, only 50%
of respondents to Max Bupa survey claimed to have renewed their policies. Many still see it as a waste of
money because it does not offer any return.
Chennai-based Veerendra Kumar is stuck at the quotation stage of a Rs 10 lakh
family floater plan. "After I was advised to buy additional health insurance, I have looked up some
policies online and offline. I have called for some quotations. I should be able to finalise a policy
soon," he says.
How much cover do you need
A health insurance floater policy of Rs 5 lakh is quite sufficient in most
parts of the country. However, it may not be adequate if you live in a metro, where the cost of medical
treatment is significantly higher. A 2-3 day hospitalisation for common diseases can land you a bill of Rs
60,000-70,000 in private hospitals of metro cities. The bill for bigger ailments can run into several lakhs
But a regular indemnity policy of Rs 3-5 lakh will not be of much use if the
policyholder is diagnosed with a serious ailment. For such cases, a critical illness plan is more useful.
But critical illness policies come at higher costs, and cover only specific ailments. Still they are better
than some disease specific covers.
Veerendra Kumar, 34 yrs, Chennai
Family: Self, homemaker wife (31), children (5 and 1) and
parents (65 and 58)
Existing health cover: Group cover of Rs 3 lakh from
Recommended cover: Floater plan of Rs 5 lakh for own
family. Separate individual plans for parents for Rs 3 lakh each.
Cost of additional insurance: Rs 41,200 per year
Don't lean too much on the group cover from your employer. Group covers have
lots of exclusions and may not cover all the costs incurred during the hospitalization. There are sub-
limits on room rent and other charges and co-pay clauses under which the policyholder is required to foot a
certain percentage of the bill.
Take a cover of at least Rs 7-10 lakh if you want to be on the safe side.
Mercifully, the premium does not rise in the same proportion as the cover. If a Rs 5 lakh family floater
cover is for Rs 12,000 a year, a Rs 10 lakh cover will not cost Rs 24,000. It will be for about Rs 18,000 a
The type of policy to buy should be determined by your family's needs. The
number of family members and their age is crucial to identifying a policy. For instance, a young family can
do with a basic cover of Rs 5 lakh, while a family with older members should opt for a larger floater
cover. Family floater premiums are linked to the age of the oldest member. If the parents are over 50, it
would be sensible to get a separate cover for them, and not include them in the floater plan.
Use a top-up policy
One way to enhance your health insurance cover at low cost is through a top-
up policy. These plans can also be used to complement the group health cover offered by your employer.
"Companies allow employees to buy top-up covers between Rs 2 lakh and Rs 5 lakh. The annual premium for
employer facilitated covers is around Rs 1,000 per Rs 1 lakh," says Arvind Laddha of Vantage Insurance
Brokers. If your employer does not allow you to buy a top-up cover, you can always buy a top-up plan
independent of the base plan.
Top-ups are cheaper than family floaters. According to data from
MyInsuranceClub. com, a Rs 5 lakh family floater covering self, spouse and one child will cost anywhere
between Rs 10,000 and Rs 17,000 annually. A Rs 5 lakh individual health plan will cost a 35-year-old Rs
4,000-7,000 a year.