How much health insurance do you need?

In addition to factors such as stress and unhealthy lifestyles, the COVID-19 pandemic has increased the chances of ailments and hospitalisation. Healthcare costs have risen over the last few years (medical inflation is around 15%–20%), particularly after the second wave of COVID-19. Going forward as well, with improved healthcare facilities, a rise in fees for doctors, therapists, dieticians, and charges for diagnostic tests, are some factors that are likely to see an increase in cost. Therefore, having Health Insurance is a must.

This brings us to the question: what is the ideal Health Insurance cover? Honestly, there is no definitive number, and it would differ from individual to individual. If we go by the income-based formula, your Health Insurance coverage should be 50% to 100% of your annual income.

That being said, apart from income, here are a few other key factors you need to consider when buying a Health Insurance policy:

• The number of family members to be included in the plan
• Your and your family members’ current personal health
• Your family’s medical history
• The state and city where you live (to assess healthcare facilities, costs, and hospital networks that have tie-ups with the health insurer)
• Whether there are exclusions from the Health Insurance policy (viz. medical expenses arising out of a pandemic, war, riots, terrorist attack)
• Is there a co-pay clause (a clause that requires cost-sharing by the insured)
• Whether certain day-care procedures are covered
• What is the coverage for pre and post-hospitalisation expenses; the number of days allowed
• Are there any sub-limits on the hospital room/ward charges
• Are there limits on preventive health check-ups, ICU charges, the cost of treatment, surgeries (including major ones), etc
• Whether you, as the insured, have any pre-existing diseases

Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.