Widening the safety net

Life offers no guarantees. Recognising the truth in that cliche, you prudently renew your health insurance every year so that unforeseen medical expenses will never catch your family unawares. And you can’t stop telling friends how you would have been sunk without the policy when your child met with an accident that landed him in the hospital.

But what if the roles were reversed and it was you, the breadwinner of the family, who had to be hospitalised? While salaried professionals have the benefit of sick leave, but not for a substantial duration anyway, the self-employed have no such cushion. The time you spend in the hospital translates into loss of income. Does your insurance policy cover you against this?

Furthermore, there are a several other non-health related expenses that need to be factored in—expenses incurred by family members when they visit you, doctors and test labs, the cost of preventive care and the recuperative period which may require another earning member to stay at home to watch over you? Does your regular medical insurance plan address all these expenses?

THE HEALTH INSURANCE PYRAMID Start at the bottom of the pyramid, but don’t stop there. Make sure that at least one of the upper tiers belong to your insurance portfolio.

Supplemental insurance These policies cover you for non-medical expenses like loss of income during illness

Specialised plan Such policies are customised for long-term ailments such as diabetic and cancer care

Additional covers This includes riders; critical illness and surgical benefits

Employees group plan Helps you cushion some of the health costs your individual plan does not

Individual plan This is the plain vanilla variety offering basic health coverage

To cover for such expenses and loss of income, several insurance companies are now coming up with supplemental health insurance plans. “The cost of treatment of killer diseases like cancer can ruin a person financially, which is where health insurance plays a crucial role. But, what about the loss of income when one is hospitalised?” remarks V. Jagannathan, chairman and managing director, Star Health and Allied Insurance.

Also, as Kolkata-based financial planner Rajesh Dalmia explains, “Health insurance policies come with many limits and sub-limits, fuelling the need for supplemental insurance.” Offered by Tata-AIG, Bajaj Allianz, ICICI Prudential and Star Health and Allied Insurance, these policies pay up a fixed sum of money for the number of nights one spends in a hospital.

Thus, supplemental plans cover non-medical expenses not covered by the basic schemes. Says Bhargav Dasgupta, executive director, ICICI Prudential Life Insurance: “Our research shows that many customers believe that existing policies would not cover all the expenses related to hospitalisation or surgical procedure, leaving them with a considerable financial burden.” Moreover, health insurance plans are annual in nature and a claim can push up the premium or the policy renewal itself can become difficult. “We launched Hospital Care to fill this gap in health insurance and also offer customers control over their health spends,” adds Dasgupta. What tilts the scales towards Hospital Care is the long-term nature of this plan running up to 20 years.

Such policies are likely to find favour amongst people of all ages who want to financially hedge against the possibility of a medical condition cropping up in the future. And unlike no-frills health insurance plans which may not compensate your full expenses, these policies provide full coverage.

However, not all experts are convinced about the advantages of such a policy. “It is not a substitute for health insurance, it’s a supplement to long-term healthcare,” clarifies Dalmia. If the compensation for lost income does not catch your eye, there are tax benefits to consider—under Section 80D up to Rs 15,000 a year is deductible from your taxable income.

Like clothes, there is no onesize-fits-all plan out there. Some plans will be more suited than the others for your family’s requirements so choose wisely and live financially healthy.