It is quite true that health insurance policies have become important in today’s times. Life is often unpredictable, and hence it turns out to be even more vital to protect yourself and your loved ones from the unforeseen circumstances. Diseases and health issues can make a big hole in your wallet. We all know how expensive medical facilities and services have become in today’s times. This is the reason why health insurance policies are so crucial for us.
When someone is protected by an effective health insurance policy, he/she does not have to bother at least about the finances. One thing he/she can remain assured that if anything goes bad, he/she will get the best medical facilities. In India, people have started realizing the importance of health insurance policies. But, one question that often people ask is- how much should be the cover amount?
Understanding the right coverage amount for your health insurance policy
When you buy a health insurance policy, you have to choose a coverage amount. Like we know, the premium you pay for your health insurance policy is directly proportional to the coverage amount. So, if you are choosing a higher cover value, you also have to shell out a higher premium every month/year. Some people go for low coverage amount, just to save some money on the premiums. But, when a situation comes where they have to file a claim, they find the coverage amount to be insufficient. So, if you want to avoid such a scenario, there are certain things you have to keep in mind at the time of purchasing a health insurance policy.
- Cost of medical treatments
Nowadays, you will find a wide gap between the medical treatments offered at the government and the private hospitals. Even in the private sector, you will find a wide range of options; from a simple nursing home to large private hospitals, where one can avail five-star hotel like treatment. So, it all depends on what kind of option you want to go for when it comes to availing medical treatment facilities.
There is no doubt that the government hospitals cannot compete with the private hospitals in terms of facilities offered. So, if you want a hassle-free experience of medical treatment then you should choose a coverage amount accordingly. Another important thing regarding the cost of treatment is related to the medical inflation rates. 12 to 15 percent is the current medical inflation rate; so, if you are paying 1 lac rupees for a medical treatment in 2018, after 10 years it will cost around 4 lacs. So, you have to choose a cover accordingly.
- Annual income percentage
Your annual income also matters a lot in determining the coverage amount. In fact, it is directly proportional to the coverage amount of your health insurance policy. Your annual income is used for determining the maximum coverage amount you are eligible for. So, if you are planning to keep the coverage amount high, do take into consideration your income.
- Family history
There are many diseases and health issues that are hereditary. So, when a health insurance company determines the coverage amount you are eligible for, they look into your family health history. If your family has a history of high-risk disease, you must go for a comprehensive health insurance policy. Plus, you should also keep the cover amount high enough to meet the medical treatment expenses related to that particular disease.
- Your age
Yes, your age also plays a vital role in determining your health insurance coverage. If you are below the age of 45 years, you can take the risk of keeping the coverage amount low. But, people above this age should keep the coverage amount high because they are more vulnerable to high-risk diseases. In addition to your age, you should also take into consideration your lifestyle. If you have a very active lifestyle and it involves good amount of physical work, you can go with a low coverage amount.
- Income tax exemption
Under the Section 80 D of the Income Tax Act, you become eligible for an exemption in the tax if you buy health insurance plan. So, at the time of buying a policy, you must calculate the amount of tax exemption you are eligible for. In this way, you will end up getting the best deal for your wallet. The tax exemption can be seen as a discount on your health insurance policy premium.
So, those were the five important tips you should keep in mind in order to figure out the right coverage amount for your health insurance policy. Discussing these things with the health insurance policy advisor can provide you more details in this regard. Therefore, do no shy away from asking questions.