We are living in expensive times with rising costs of healthcare estimated to be around 15%. Inadequate health insurance can deal a heavy blow with a medical emergency resulting in a huge financial setback. The retirement years are often considered to be the golden period in one’s life. However, this is possible only for those who have adequate health insurance policies to protect against rising expenses from unforeseen medical conditions. In old age, medical care makes up a sizeable portion of one’s expenditure.
Further, there is a lack of regular income by way increased earnings to cover the escalating medical costs. A health insurance policy safeguards one from dipping into one’s retirement corpus to pay for medical emergencies. A health insurance policy pays for varied medical expenses comprising hospitalization, room rent, surgical procedures, nursing expenses, doctors’ fees, cost of medicines and diagnostic tests. One can opt for a plan for oneself or/ and for one’s family. We shall try and understand about medical insurance and the benefits of opting for health insurance policies as part of retirement planning.
What is health insurance?
Health insurance provides monetary cover for certain predefined medical conditions to the insured in return for regular health insurance premium payments by the insured. In case of sudden occurrence of a medical illness, the amount towards treatment expenses can be claimed and reimbursed from the insurance company. The health insurance claim is reviewed, and the amount is disbursed to the requesting party on approval of claim, subject to fulfillment of conditions in the health policy.
Planning for health insurance
- Sooner the better: It is prudent to avail a health policy early in one’s life as part of retirement planning rather than purchasing a senior citizen health insurance policy later. This is because insurance companies consider the risk profile of senior citizens to be higher and include restrictive clauses by way of cost caps, waiting periods, co-pay clause to share the claim burden and sub-limits for certain ailments. With advancing age, one becomes more susceptible to ailments, especially lifestyle diseases.
- Inflation proof strategy: It is important to inflation-proof one’s medical insurance as medical costs continue to soar, owing to the limited availability of quality healthcare and growing demand for premium healthcare. Hence opting for adequate health cover for oneself and one’s family is vital. This would ensure that one would not have to incur out of the pocket expenses towards sudden medical expenditure.
- Automatic renewal: In case one makes a claim on the policy in a particular year, the original insurance cover is available, when it is renewed in the subsequent year. This way one can continue to renew the policy and enjoy health cover for life.
- Early head start: It must be kept in mind that while health insurance is renewable for life, the premiums increase as one ages. Thus, it is imperative to include health insurance as part of one’s retirement planning and start early. Availing health insurance policies early on would result in lower outgo by way of premium payment. Further chances of rejection on grounds of health conditions are low at an early age.
- Plan one’s own health insurance: It is imperative to plan towards one’s own health costs, rather than depend on the health cover provided by one’s employer, which is active only until employment.
- Longevity factor: With advancing medical care, life expectancy has drastically increased. Thus, it is important that one’s retirement corpus is sizeable and lasts longer. The longevity risk of depletion of retirement funds is a serious concern area. Having in place a health insurance policy will ensure that one need not eat into one’s corpus and prevents derailment of retirement finances.
The importance of health insurance cannot be overemphasized especially towards planning for one’s sunset years of post-retirement. It’s important to be insured against the monetary impact of sudden medical emergencies. One may not use the medical policy or might even realize that one has paid more than the amount claimed, however, the risk of being uninsured is far more disastrous. When it comes to one’s and one’s family’s health, it is always better to be safe than sorry.