I am a young professional and with a family comprising my wife and a one-year old daughter. I am not able to figure out the right health cover for my family. Also, if I should buy inflation adjusted insurance?
-Prasun
The right amount of cover varies for everyone. It is determined by the number of members in your family, their medical history, lifestyle and budget.
You can insure your family with a family floater policy or individual policies for each member. A floater policy covers entire family under a single policy and the sum insured can be utilised by any member in the hour of need. This is more cost-effective against buying individual policy for each member.
Floater policies assume that all members will not fall ill at the same time. Hence, an ailing member can utilise the cover that was meant for a family, which means he has a good amount of insurance to cover his bills. However, if more than one member fall ill, and one has already used a large chunk of the cover, the other is left with little or no protection in that term.
You can reach the amount of cover by looking at the medical history of your family. If you have had a history of any chronic disease in your family, you should buy higher coverage as the risk of getting the disease is high. You can also consider buying a separate critical illness policy to cover major chronic illnesses apart from basic health insurance to enhance protection.
Another factor that decides sum assured is your standard of living and the kind of hospitals you visit for treatment. The cost of treatment varies with city of residence. Hospitals in metropolitan cities would be more expensive as compared to those in other cities.
Budget is another determining factor. Cost of insurance increases as you increase sum insured. You should pick a policy that meets your needs and fits your budget.
Inflation works its way into all costs, hence, your medical cover should also be inflation-proof. Health insurance sum insured can be increased anytime in future at the time of policy renewal if the insurer accepts your proposal.
You can also consider a top-up policy for additional coverage. Such policies cost less than a basic policy, and pay medical bills stretching beyond your means. Here, you decide the limit from which you want policy benefit to kick-in.
This article was originally published on January 02, 2014.
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