The obvious main benefit of health insurance is that the insurance company will pay the hospitalisation cost of the insured person. For this, the insurance company charges a yearly premium. This premium is your cost and is not refunded if there is no hospitalisation.
Instead of paying the premium and getting a health plan, you could invest this amount. Let’s see what would happen in that case with an example.
Let’s say you are between 31-35 years of age and you buy a health insurance plan for Rs 30,00,000. Your approximate annual premium would be Rs 19,000. Now, instead of buying health insurance if you invest this amount of Rs 19,000 every year (including a higher amount after 5 years since premium would go up). You will have Rs 3,45,000 at the end of 10 years at a return of 10% pa. If at any time during these 10 years, you are hospitalised and incur an expense of higher than Rs 3,45,000, you will be better off with a health insurance plan. Further, if there is no claim in the early years, your coverage can increase to 45,00,000 or more with no claim bonus.
Apart from the obvious reason of having the insurance company pay for the hospital expenses, here are the other top benefits of health insurance.
Top Benefits of Health Insurance
Building Wealth: Investing over the long term produces wealth that surprises most people. This happens because of the power of compounding. However, this can come under threat if it is unnecessarily interrupted. One of the main reasons why people withdraw investments is because of a medical emergency and hospitalisation. Having Health Insurance keeps your investments safe and lets the Insurance company pay your hospitalisation expenses.
Preventive Care: Some policies provide for free medical check up up to a certain amount every few years.
Consultation and Fees: Some policies offer free tele consultations with their panel of doctors. Some also reimburse certain amounts for Outpatients Department (OPD) consultation.
Prescription Medication: Most health insurance plans provide for medication some days before, during and some days after hospitalisation.
Maternity Expenses: Some health insurance plans provide maternity expenses up to certain limits.
Tax Benefits: Premiums paid for health insurance up to certain amounts can be deducted from your income, lowering your tax.
Peace of Mind: Knowing that you have a health insurance plan can reduce the fear of facing crippling medical bills or making life altering decisions based on money constraints. This peace of mind can contribute to the overall well being and reduce stress.
Want to know how much health insurance you should get along with other financial products you should invest in? Build your personalised investment plan with Propel Money here.