LoanRaja Blog- Personal Finance Guide

Health insurance premium is no more a charge you have to incur year after year. Now you can earn returns on your health insurance premium too.

Health insurance has turned the buzz word these days with many realising that it is an integral part of the portfolio. Even the employees have begun to look for independent health insurance plans thanks to the growing uncertainty at the work place. What has improved the popularity of the product is the rising medical costs and the likelihood of employer discontinuing the premium for the current year.

The good news for investor is that there has been a wider range of options. Besides the regular health insurance plans from general insurance companies which are popularly known as Mediclaim, there have been other variants from private sector. Life insurance companies which got into the action during the last couple of years have turned more aggressive by adding more features into to health insurance plans. For instance, India’s largest insurance company, LIC, has Health Plus which promises returns besides providing health cover. Now, ICICI has joined this fight by introducing market-linked features to its health insurance product. The other life insurance company, HDFC, which has been more focused on pension plans and insurance, too has joined the bandwagon and has a health insurance in its portfolio. With the growing options, it may become a necessity for investors to have more than one health plan in their portfolio. Does it make sense? Just check out if the following things are applicable to you.

Additional plan over and above provided by employer: It isn’t any more a luxury to have a separate health insurance plan for the family. Over and above the health cover provided by your employer, take another floater policy for the family. This should cover the entire family including parents. If your parents are not eligible to get cover from private or general insurance plans, sign up for Star Insurance which provides a cover of Rs 1 lakh for those above the age of 60 too.

Health cover from life companies a luxury: the insurance plans provided by life insurance companies are expensive when you compare them with general insurance plans. The premium is higher by at least 2-3 times but the advantage is that you can have them along with general health cover. Also, health companies allow you to claim the expenses with copies of bills. The biggest disadvantage with these products is that they are on individual basis. You can’t have a single plan for the entire family and hence, take a plan for the high income earning individual of the family. Since the premiums are expensive, it may make a better sense for the newer versions of the products where the premiums offer market-linked returns in the absence of claims. This will also ensure returns besides providing tax benefit. For instance, a professional in the age group of 40-45 may end up paying an annual premium of Rs 15,000-17,000 and if the premium can provide returns, the investor will be able to earn a couple of lakhs over a period of 10-15 years.

Increase health cover gradually: Insurance isn’t any more a one-time affair as needs keep changing over a period of time. With portability of insurance policies between different companies being a reality, you can take a comprehensive view of your health cover at regular intervals. However, review your health cover once in five years so that it is more realistic with the changing medical costs. Besides increasing the cover amount under existing plan, multiple products too can be considered for increasing the overall benefit.