Protect your health

At 33, Hyderabad-based Bangar Raju had never had it better. He was doing well in his career and had not suffered from anything other than an occasional cold. But the body is a complex mechanism, and for some reason, Raju’s kidneys simply stopped functioning one day. Renal failure meant that he had to be hospitalised and had to have regular dialysis until he could find a suitable donor. Once it was found that his mother was a match, the organ transplant took place. The total cost: Rs 4 lakh plus, as well as the time away from work because he was advised six months of complete rest.

In Delhi, businessman Prashant Sinha rushed his wife Prabha Rani, 38, to hospital in January this year because she complained of breathlessness and shooting pain in the chest. Sure enough, it was a heart attack and Prabha Rani had to get an angioplasty done. The cost of the procedure and stay at Delhi’s Balaji Hospital: Rs 1.5 lakh.

Two similar stories but with vastly different endings. Raju, who actually suffered a far greater financial loss than the Sinhas, was smiling when the bills had to be paid, while Sinha had to wipe out a chunk of his savings. That’s because Raju had taken a health cover and Sinha thought he and his wife did not need it. “All I had as insurance was a life insurance policy. I did not know I could get insurance to cover health ailments,” says Sinha.

Critical illness prevalence
Disease name	Incidence*	Treatment cost (Rs)#
Cancer	0.945	2 lakh
Coronary artery disease	4	1.5 lakh
Cardiac valve replacement	1.156	1 lakh
Major organ failure and related transplant surgeries	very low	4 lakh
Stroke and paralysis	2.03	5 lakh
Renal failure	7.85	5 lakh
Multiple sclerosis	very low	1 lakh
*Incidence per 1,000 people #Depends on type of hospital and number of beds available
46% of Indians sleep for less than 6 hours a day Lack of sleep affects the immune system
30% of those who have heart attacks are below 40 years old Heart attacks are now common among the yuppies
18% of the urban population suffers from hypertension Hypertension leads to renal failure, strokes, etc
66% of deaths today are due to cardiovascular diseases A bad heart leads to other organ complications
Source: Centre for Community Medicine, All India Institute of Medical Sciences

Whether it’s through ignorance or sheer optimism and faith in their health, most people end up like Sinha—without any health insurance. This could prove dangerous to your financial health.

Healthcare costs are spiralling out of control and you could end up spending lakhs for even simple surgical procedures. According to a CSO and Citigroup Analysis, healthcare costs have more than doubled in five years from 2001 to 2006.

Given the increasing levels of stress at workplace, lifestyle-related illnesses are affecting people even in their 30s. Statistics show that 30% of Indians diagnosed with heart problems are less than 40 years old.

Unlike in many developed countries where at least basic healthcare is state-provided, we have to take care of most expenses with little help from the government. Healthcare spending totals up to 6% of India’s GDP, of which 83% is private.

It’s a potentially deadly cocktail— zooming health-care costs, prevalence of lifestyle-related and other illnesses, and despite this, a longer lifespan. With no external help, how can you pay the hospital bills? Like Sinha, you can, of course, choose to wipe out your savings and put off retirement for several years. The wiser option is to let an insurance company pay for your healthcare. Health insurance is not only a way to meet the costs of an illness or injury, but more importantly, a vehicle for protecting your existing assets and financial plans.

In fact, experts now reckon that if you do not have a good health insurance plan to help manage your healthcare expenses, a serious illness or injury can create a major financial burden.

The problem lies in making a financial commitment for a product you might never use. For several lower- and middle-income families, putting aside a specific sum towards health insurance is an expense they can do without. Also, rising healthcare costs are pushing premiums up, making even financially secure individuals wonder if it’s worth paying for.

While there is some logic to this, it’s ultimately short-sighted. Economic theory suggests that health insurance will actually become more valuable when the cost of healthcare goes up, because the financial risk due to non-coverage increases. Also, it’s worth remembering that you can get a tax break. Under Section 80D of the Income Tax Act, a maximum of Rs 15,000 (Rs 20,000 for senior citizens) paid as health insurance premium in a financial year is deductible.

The next problem is deciding which plan to take. Should you take an exclusive health cover or is the group medical cover offered by your employer sufficient? Will a health rider with your life insurance cover serve? What is the ideal premium amount and how much cover should you take?

Over the next several pages, we will try to answer these and other related questions. What you should know before going any further is that health insurance is as important as a life cover. And that, like death and taxes, hospital bills are now inevitable in any family. Don’t let them cripple the financial future of your family by refusing to take health insurance.