Calling The B@!@#$T On "I Don't Need Health Insurance!"

After 10 years of working in health insurance and writing extensively about it, it’s really amusing to me that I am writing an article explaining why does one need health insurance so late in the day. Better late than never, I'd say!

But as always there is a story behind this. Just a few days back, I met an old friend who is the Retail Sales Head at a leading bank. While discussing mundane things from weather to politics to sports, the discussion somehow diverged to health insurance and its needs. I was surprised that he, at the age of 37, still did not have any personal health insurance! While I managed to convince him, it was rather appalling to see that even people in the finance sector themselves, find it confusing, intimidating and have such misplaced opinions about it. Hence the strong desire to finally write this post.

There are 3 key reasons why buying Health Insurance is important:

a) Healthcare Inflation:

With huge rise in cost of land, doctor fees, scientific equipments, Hospital bills are skyrocketing through the roof, and largely becoming unaffordable. A regular hospitalisation can cost close to Rs. 3 Lakhs to Rs. 5 Lakhs. A major hospitalisation in today’s times can cost anywhere between Rs. 5 Lakhs to Rs. 10 Lakhs. And each year, this cost is going up rapidly. Tower Watson data from leading global insurance companies states that the average inflation in health costs each year is about 11%. That means prices would roughly double in about 7 years.

b) Unhealthy Lifestyle:

1. No Physical Activity: We are in the “touch screen” age. Surrounded by an average 2-3 electronic gadgets per person, plus the addictive television, we have no reason to move from our couches for any kind of physical activity.

2. Unhealthy Eating Habits: Junk Food, fast food, greasy food, eating out has become the modern, urban way of life.

3. Work-related Stress: As per various health reports, most of the health issues in urban areas like Heart Disease, Diabetes, Obesity, Thyroid are stress induced ailments.

This obviously means a rise in the number of lifestyle related illnesses, such as heart diseases, diabetes etc striking early on in our generation. And thus, rising healthcare costs.

c) You may not get health insurance when you need it:

Here’s my personal experience: Health Insurance Companies are very keen to cover people who are young, and do not have any health issues. On the other hand, a small declaration on an adverse health condition or history, and insurers’ alarms are set off. They want to find some reason or the other to make it difficult for you to buy the policy, either by asking for medical check up, bumping up the premium or worse, applying additional terms. Hence, it is only wise to buy Health Insurance when you are young and healthy, so you get the best terms. Remember once you buy the policy, and if you have any issues with health afterwards, insurance companies won’t penalise you or load premiums and would continue to serve you, provided you keep renewing your policy on time.

Now that I have explained how health insurance is necessary, some of you may still have some arguments against it. I have tried to list down some of the arguments. If you still have some more, please feel free to post them in the comments section below.

I am covered by my Company’s Health Insurance:

Health Insurance is a smart investment that protects you from lifelong healthcare expenses. Why should you depend on your employer for such a basic, core personal need? Imagine if your employer provided you a year-long supply of clothes to wear, would you depend on your employer for your wardrobe choices? Your taste, your needs, your preferences, will never exactly match with those of your employer, or anyone else.

What makes you think that the health insurance that the employer is buying for you would be suitable for you?Employers have their own budgetary/financial challenges when renewing group health insurance policies year on year. If premiums rise substantially, they may reduce the cover or introduce stringent terms and conditions to control. This may not suit you or cover you efficiently as per your individual needs.

It’s no more a secret that Corporate Health Insurance covers are shrinking. With premiums rising year on year, employers are being forced to introduce co-pays, room eligibility capping, surgery limits to meet their budgetary constraints. What’s more important to realise is that you don’t carry your health insurance with you as you quit the job and move on. Your new employer may be a company that does not provide a similar insurance cover, or may be a start up in which case, most probably, you won’t have one at all. For a thing as important as your family’s health do you want to depend on someone else’s choices?

I will port my Company Health Insurance to an Individual policy when I move jobs.

Porting Health Insurance as per IRDA guidelines is only good on paper. Health Insurance companies have a laundry list of ready-made reasons why they will not be able to port your company health insurance to an individual/personal health insurance, especially if you have made claims, or want to port any family member with any ailment. It is as good as buying a new policy, which as mentioned earlier becomes very difficult to buy if you’ve made a prior claim or one of your family members suffers from any disease or has a pre-existing condition. Insurance companies are in their right to reject new policies, issue additional terms and/or load the premium, as there's higher risk for their retail portfolio when taking on cases with proven illnesses and prior claims.

I am young and healthy.

When you say you are healthy, are you indicating that you have no risk of getting hospitalised at all? Do you have no risk of meeting with an accident? Do you have no risk of falling ill with Malaria or a Dengue or Typhoid? As per a recent report by a credible Insurance company, people in the age group of 23-30 are one of the highest claimants of Health Insurance. Most of the claims they make are related to accidents or unhealthy food habits (gastroentiric or food poison related hospitalisation).

I don’t trust Insurance companies.

Insurance companies are governed by IRDA, a Government of India body. If you trust your money, hard earned savings with a bank which is also governed by a Government body, there is no reason to not trust Insurance companies who have similar rules with respect to maintaining enough cash to pay claims to ensuring grievances are responded to. Protection of Customer Interest is one of the primary roles the IRDA plays in the Insurance Industry. In my experience Insurance companies are in the business of paying claims. The market will not allow them to survive and sustain in this country if they do not pay valid claims. In the last 10 years of my Insurance career, I have not seen a single case where a valid claim has not been paid. There have been the odd exception of escalating matters, disputes, or delays but finally, all valid claims have always been paid.

It’s better to create your own corpus than invest in health insurance.

That does not work by any mathematical calculation. My calculation in the last post, estimated a 30 year old person to invest Rs. 8400 a month, to create a healthcare corpus of Rs. 60,00,000 at the end of 30 years. In comparison a Health Insurance will only cost Rs. 15000 per year. So Insurance being expensive is a big myth. In fact, it makes a lot more sense, at the current prices.

Insurance is very expensive, and unreliable.

As mentioned in my earlier answer, Insurance is not expensive. Look at it like this. You pay an average premium of Rs. 12000 for Rs. 5 Lakhs annual coverage. In a span of 30 years, you end up paying Rs. 3,60,000/-. Even if you make 3 hospitalization claims of Rs. 2 Lakhs, within each you have recovered the premium you paid. Of course, there is more reason to celebrate in case you have no claims at all. Think of the premium as a charge you are paying to protect your hard earned savings from any medical exigencies.

I don’t understand Insurance hence I have not bought a policy.

No more do you need to read through fine print, jargon or compare multiple brochures, benefits, meet unreliable insurance agents to decide on buying Health Insurance.

Easier means are available. For instance you can compare health insurance on Insurance comparison portals like Coverfox. Coverfox provides detailed yet quick comparison of all salient terms and conditions that you must know before you buy the policy.

What’s more, help is also available on a phone call, if you required. There is an advisory team available over phone calls, to discuss your needs, and answer your questions and address all your doubts. No obligations to buy. No charges whatsoever. I hope I have convinced you to buy a policy today. Kudos to you if I have. If not, I still extend my best. Wish you lots of luck! You’ll need all of it and more!

Recommended Link: Why Mediclaim Policy