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Why it's important to buy personal health insurance

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Health insurance provides risk coverage against expenditure caused by any unforeseen medical emergencies. In current times of high medical inflation rates, failing to hold adequate amount of health insurance cover can prove to be a major personal finance disaster. This could lead to either poor health care because of non-affordability or spiral an individual into financial distress due to high medical bills.

There are two common mistakes when it comes to buying life insurance and health insurance.

  • People don't act at the right time, and
  • When they realize that they have made a mistake they try to over-compensate by buying too much insurance.


There is a popular saying about health insurance: "Buy health insurance when you don't want it, because you may not get it when you want it."

Currently, majority of the salaried professionals are provided health insurance cover by their organizations. Majority of the employees are increasingly dependent on such health insurance cover to counter their health contingencies. However, they often fail to assess their health insurance requirements and don't realize the benefits. It is advised that professionals opt for personal health insurance cover as well.

The following points signify the importance of personal health Insurance cover.

1. Insurance cover provided by your current health insurance plan
Most of the organizations provide a basic health insurance cover. The basic health insurance might cover individuals from minor ailments and provide a decent amount of coverage. However, this amount might often be insufficient in case of a major emergency. It is important that individuals prepare themselves for such major contingencies and make a provision through adequate health insurance cover.

2. Validity of your health insurance provided by your organization
The validity of the health insurance cover provided by the organization is connected with the time span of your association with the organization. Such health insurance policies lapse once you leave the organization. A potential job change, job loss and retirement are situations when an individual faces a no health insurance condition. Individuals would then liquidate their savings or assets to meet any medical contingencies. This might affect their budgeting and financial plans they hold for achieving their goals. A personal health Insurance cover is valid as long as the payments are made.

3. Start early: Benefits of buying health insurance young
Buying a personal health insurance policy is cost-efficient while one is young and free from medical complications. The premium is lower and the policy offers comprehensive coverage in comparison to a policy purchased at an older age. As an individual grows older, the cost of the cover increases and if one develops health issues, the health insurance company tends to exclude pre-existing conditions which defeat the whole purpose of buying a health insurance. Most health insurance companies have an upper age limit for the policies, which means one would have limited options after retirement. One can enjoy the benefits of cumulative bonus in the form of no claim benefit if they renew the policy without any claims.

4. Tax benefit
The icing on the cake by opting for a personal health insurance policy is the tax benefit. Payments made towards health insurance premiums are eligible for tax deductions under section 80D of the Indian Income Tax Act. Individuals less than 65 years of age can claim a deduction of up to Rs 15,000 for the health insurance premium paid for themselves, or for their spouse, children or parents. However, it should not be the driving force behind making the decision of taking a personal health insurance policy. The need to improve risk management should be the driving force behind opting for a personal health insurance policy. One should scientifically calculate the amount of health insurance required with the help of a proficient financial advisor and make sure that they are adequately covered.

ArthaYantra.com provides personal financial advice online.

Disclaimer: The opinions expressed in this article are the personal opinions of the author. NDTV Profit is not responsible for the accuracy, completeness, suitability, or validity of any information on this article.



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