When we hear about Health Insurance, we think of an insurance plan which generally covers the cost of treatment when you are admitted in the hospital. The pay outs are made on actual expenses incurred in the hospital during the treatment period. These pay outs are made either on submission of original bills or through cash less route wherein the insurance company pays directly to the hospital. These plans are popularly known as Mediclaim plan.
What probably not known to the mass policy holders is that Life insurance health plans are one of the most cost effective ways of protecting yourself financially when you are diagnosed with a serious and critical illness.
Difference between health plans and mediclaim plans
Mediclaim plans are the basic health insurance plans which generally cover the cost of treatment in case you are hospitalized.
While the life insurance health plan has nothing to do with your treatment at hospital,it reimburses the insurance amount just on the basis of diagnosis of a critical illness, provided the health plan covers that critical illness.
But why it is so important
As you know, today’s fast changing lifestyle has made all of us vulnerable to serious illnesses such as a brain tumour, heart attack, critical stage cancer, or a stroke. While, advances in medical science has ensured that average survival age is increased much more than ever, but what is missing is that even if you survive post a critical illness how you are going to support yourself financially as the survival cost could be very high. Some of the survival cost can be expenses on prolonged treatment at home, loss of income as you are unable to work, meeting other financial obligations etc.
This is where the life insurance health plans help you! The life insurance health plan ensures that a sum of amount equivalent to the health cover taken by you is paid to you as soon as the critical illness is diagnosed. Therefore, while the Mediclaim plans takes care of your hospitalization costs, the life insurance health plan provides a lump-sum payment on diagnosis of the critical diseases or other ailments as covered under your health plan.
What are the main benefits of a health plan
We have discussed, how health plans can help you easily overcome the financial crisis arising out of any major disease that might stuck you and jeopardise achieving your other priorities in life. But this is not the only benefit of having a health plan, there are more -
Protection against all the major critical illnesses
The common myth about health plans is that it covers only few of the commonly diagnosed diseases like Heart ailment, Kidney failure or transplant, Cancer and liver diseases etc. However, that is not the truth as health plans cover many more critical illnesses and chances are that you may not have heard of them frequently.
Some of these critical illnesses are – Open Chest CABG, Permanent Paralysis of Limbs, Kidney Failure requiring Regular Dialysis, Alzheimer's Disease, Loss of limbs, Kidney Failure requiring Regular Dialysis, Loss of Independent Existence, Parkinson's Disease, Deafness, Loss of Speech, Chronic Recurrent Pancreatitis, Ulcerative Colitis, Angioplasty, Lung Diseases, Encephalitis, Major Burns, Major Organ/ Bone Marrow Transplant, Major Head Trauma, Blindness, Brain Surgery, Primary Pulmonary Hypertension, benign brain tumour, Open Heart Replacement Or Repair of Heart Valves, Surgery to Aorta and many more.
This is one compelling feature which tells you to must have this plan.
Premiums are unchanged if your health condition changes
Premiums do not change as you grow old. The premium once fixed continues till end of the plan tenure. Therefore, one should buy the plan when one is young as the premium will be low and continue till maximum period allowed by the life insurance company.
Remember, as you age chances of having a medical problem or critical illness increases.
Benefits on paid up policy
If you stop paying the premiums within the stipulated period of the policy, the policy can lapse and you might not get the full benefit.However, the policy will be treated as reduced paid up in case if the premiums have been paid at least for the minimum stipulated period. Therefore, cover will also be reduced to paid-up sum assured.
The above is an example only and different companies may follow different method for arriving at the reduced cover cost.Therefore, even if you are not able to pay the premiums for the full term due to financial hardship, the benefits of health plan continues till the maturity period, albeit with a reduced sum.
Best option for income replacement
As you know, once diagnosed with a critical illness you can present the diagnosis proof and get the health cover amount from the life insurance company. This is irrespective of whether you were hospitalized or not or the amount spent during hospitalization. The amount so received provides great relief as it helps you with meeting day to day expenses and loss of income that might arise due to prolong sickness and absence from work.
For example – You have a health insurance plan of Rs 10 Lakhs and met with a heart attack, you get hospitalised and Mediclaim insurance pays the hospitalization cost. Meanwhile, the health plan pays you Rs 10 Lakhs which you can invest in a safe investment and earn a monthly income out of it and recover the losses that might occur in other expenses and due to loss in wages. Therefore, it is the best way for income replacement when you need it most.
Maximum maturity age
You can take health plan coverage till age 75. Therefore, you need not depend on your family in case of sudden emergency expenses that might arise out of the diagnosis of the critical illness.
Under section 80D of the Income Tax Act 1961, the income tax benefit is allowed upto Rs 25,000 per financial year (based on last budget) on the premiums paid on health plans.
Why health plans along with a life Insurance plan is essential
You may think that death is the biggest risk you will ever face in life. Unfortunately that is not correct, a critical illness is a much bigger risk. Majority of Indians spend around 70% of their total income on Medicines, diagnostic charges and Health Care expenses, according to WHO Regional Advisor Kathleen A. Halloway.
Then why the health plans are not popular? This is simple because people are not aware about the benefits of this plan.
For example – Consider you have adequately covered your life through a life insurance plan so that your family is financially protected in case of your sudden death and their short term and long term goals are not disturbed even if you are not there at that time.
Imagine a situation, where you have saved for your Child’s higher education and also paying a monthly Home loan EMI and suddenly diagnosed with a critical illness. In a situation like this the treatment cost of one critical health disease can drain out all your savings which you would have made for meeting other financial goals. If you do not want your family’s dreams to get shattered just because of an illness, it is always beneficial to take a health plan.
Therefore, if you are surviving and meeting a critical illness, the health insurance plan takes care of your emergency financial need which ensures you need not touch any of your other savings. If you are not surviving, then the life insurance policy takes care of the financial protection of your family.
We have seen how a life insurance plan protects the financial future of your family and ensures that the family’s future goals are not compromised. On the other hand we have also seen that if you take the health plan along with a life insurance plan then the sudden expenses arising out of a critical illness diagnosis, it does saves you from sudden financial crisis. The health plan ensures that you do not have to touch any other savings which you have made for meeting your other financial goals and welfare of the family.
Take a health plan and ensure your family dreams does not get shattered just because of a critical illness, especially when you could have protected yourself from it financially. Therefore, it is most beneficial for you to take a health plan along with a life insurance plan.
We can conclude that to have a peaceful and enjoyable life taking both the plans – Health plan and life insurance plan – is must, as both are complementary to each other.
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