3 Lakh Health Insurance

Health insurance is a plan or policy that covers your medical and hospitalisation expenses. It is a contract between you (the insured) and your insurance company (insurer). Medical insurance helps you to offset medical expenditures, whether planned or unexpected.

As per the policy or the plan selected, the insured pay a certain premium for availing the selected plan. The insurer, in turn, agrees to pay for the medical expenses (if it occurs) for a set period as per the plan's terms and conditions. If you purchase a ₹3 lakh mediclaim policy, the insurance will cover the medical costs of up to ₹3 lakhs.

There are many reasons why you should buy health insurance. The prime one is that it ensures your and your family's protection in the event of an emergency. Also, it gives you peace of mind that you are covered. Thus, knowing the details of a health insurance plan well before buying, becomes extremely crucial.

Insurance policies like health insurance and motor insurance work on the principle of indemnity. This means the policy compensates the policyholder only in the event of loss borne by the policy. For instance, for health insurance, the compensation or payment is done if the insured files for it in the event of medical need.

The sum insured is the maximum amount the insurer pays annually for hospitalisation and medical emergencies. For example, if you consider buying a health insurance plan for ₹3 lakh sum insured. If you are then hospitalised twice during the year, your health insurance plan can come to your rescue. Now assume your hospital bill in the first instance comes at ₹1.5 lakhs and in the second incident is at ₹2 lakhs. These expenses typically include doctor's consultation fees, nursing fees, room rent charges, surgery fees, medicine costs, imaging and lab tests costs, etc. Thus, the total cost of medical expenses is ₹3.5 lakhs.

The insurance company is, however, liable to pay only to the extent of ₹3 lakhs depending on the inclusion, exclusions and other terms and conditions of the selected insurance policy. You are liable to pay for the excess ₹50,000 in your pocket.

With rising medical inflation, a medical emergency can erode your savings in case of an unexpected medical emergency. While a health insurance plan is essential and a smart way to tackle medical costs, having an adequate sum insured is equally important.

Let us understand this by way of an example.

Bhavin is 32 years old and works in a pharmaceutical firm. He earns ₹50,000 a month and can save ₹20,000 out of it. At the age of 42 years, he can save around ₹150 lakhs.

However, when he reached the age of 42, he was diagnosed with Myocardial Infarction, a heart and vascular condition. The condition required Bhavin to undergo many tests, and the doctor recommended angioplasty. The costs of hospitalisation and treatment were very high.

The stress levels were high as Bhavin is the sole earning member of his family, including dependent parents, wife and a young daughter. Apart from this anxiety, Bhavin must arrange funds for this expensive treatment. Below are the three scenarios that can take place.

Scenario 1: If Bhavin has no health insurance

If Bhavin had yet to purchase a health insurance plan, chances are, all or most of his life savings would be exhausted. The situation might require him to go for additional financial assistance like loans.

Scenario 2: If Bhavin has insurance but with a low sum insured In such cases, the insurer will cover the agreed sum insured. The excess or remaining expenses will have to be borne by Bhavi.

Scenario 3: If Bhavin has health insurance with an adequate sum insured

This is the best situation for Bhavin. The insurer will pay for all the covered expenses; as per terms and conditions, Bhavin need not pay anything from his pocket. Thus, retaining his savings for the future.

When you buy a health insurance policy, choosing the correct sum insured becomes eminent. However, selecting the ideal sum insured is easier said than done. This is because there is no 'one-size-fits-all' approach to be undertaken.

Every individual needs, situations and health conditions differ. Your sum insured requirement depends on various factors. It becomes your duty to decide the optimum level of protection depending on these factors. Some of the prominent factors to determine the right sum insured include:

Age

It is always advisable to buy health insurance when you're young. The chances of suffering a medical condition are less when you are young, but it increases with age. This makes medical insurance affordable. Experts believe ₹2 - ₹3 lakhs of coverage is sufficient for individuals in their 20s as coverage can increase with age. Income

Your income is vital in determining the premium you can pay for health insurance. The premium and sum insured are directly related; the higher the sum insured higher will be the premium, and vice versa. Thus, you must purchase coverage depending on your affordability. Some experts suggest that an ideal percentage of premium should be at most 2% of your annual income.

Lifestyle

If you have highly demanding jobs with high-stress levels, less or no opportunity to exercise, follow poor eating habits etc., it would mean you require a higher sum insured as these conditions may cause health complications in the future.

Medical condition

If your family has a medical history of certain illnesses, it is best to get covered for these illnesses. This may lead to a higher sum insured.

A health insurance policy is one of the essential components of a healthy financial plan. Thus, it helps an individual in more ways than one. For example, a comprehensive policy covers hospitalisation expenses and provides peace of mind, wellness coverage, etc.

However, many insurance plans provide additional features, benefits and extensive coverage to high-sum insured plans. Still, this does not remove the importance of owning a health insurance plan for a lower sum insured. Below, individuals can consider buying a ₹3 lakh mediclaim policy.

Young individuals in their 20s

Young individuals have just begun their careers, and their earnings and savings too must have just started. They also do not face the risk of significant illness. These reasons usually make health insurance one of the essential investment avenues. However, starting young gives them the added benefit of lower premiums and imbibes the habit of saving and investing. Thus, young individuals should opt for health insurance, even if it has to be for a lower sum insured. The sum insured can gradually increase with age.

Individuals with low annual income

Some opt for a combination of base or regular sum insured with top-up plans. This option does have many advantages compared to opting directly for a high sum insured. The most evident benefit is cost-effectiveness. The premium for a high sum insured plan is higher, and for a low sum insured plan is lesser. The top-up plans, however, have high deductible amounts that must be paid by the insured.

Individuals looking to buy plans with top-up features

Some opt for a combination of base or regular sum insured with top-up plans. This option does have many advantages compared to opting directly for a high sum insured. The most evident benefit is the cost-effectiveness. The premium for high sum insured is high and for low sum insured is lesser. The top-up plans however, have high deductible amounts that must be paid by the insured.

We shall understand the difference between these two options in detail in the next section.

For policyholders, there are primarily two options available. One, you can go for a higher sum insured and get yourself covered adequately and easily at the time of claim reimbursement. However, this is at a higher premium cost. Alternatively, you can opt for base or regular sum insured with top-up plans and get covered adequately with relatively lower premium costs.

The premium for a top-up plan is lower than the premium you could have paid for increasing your base sum insured. The reason is that top-up plans come with a specific deductible amount payable by the policyholder. Let us take an example to understand this.

The Premium:

If Sameer, a non-smoker 35-year-old individual, buys a health insurance policy of ₹1 cr (₹5 lakh base plan + ₹95 lakhs top-up plan), the premium he would need to pay would be around ₹10,000 p.a. On the contrary, if he purchases a base plan of ₹1 cr, he might have to shell out ₹25,000 p.a. on average.

The Working:

Continuing with the above example, Sameer will have to pay a certain deductible amount of ₹5 lakhs. The base policy will be utilised if the claim arises up to ₹5 lakhs. If the claim is of ₹20 lakhs, the insured can get ₹15 lakhs as total reimbursement.

Base policy: ₹5 lakh (+) Top-up policy: ₹15 lakh (-) Deductible: ₹5 lakh Total reimbursement: ₹15 lakh

It is thus recommended to have an adequate sum insured with a top-up deductible at least the same as the base health plan sum insured.

High sum insured plans v/s Regular policy with top-up plans

Buying the right insurance plan is a tough choice. There are many plans available from numerous insurance providers. The aim is to select the best-suited plan for you by understanding what the policy offers at affordable prices.

Tata AIG offers plans explicitly designed to keep in mind your needs. Below are some extinguished features that make Tata AIG plans stand out from its peers and give you value for money.

Substantial Cumulative Bonus: If your policy years go without any insurance claim, you are eligible for a cumulative bonus between 10% to 100%. In this manner, you automatically increase your sum insured without paying an additional premium. The extent of the cumulative bonus depends on the type of plan selected.

Network of hospitals: With Tata AIG health insurance plans, you get access to more than 7200 hospitals across the country. This wide range of networks aids you with cashless benefits. You, thus, aren't required to file and follow up for claims as the medical expenses get settled directly with the network hospitals.

Discounts: A two-year MediCare or MediCare Protect policy offers you a discount of 5% on the premium, and a three-year policy tenure for the same will give you a 10% discount. Similarly, for a family floater health insurance plan, you can avail of a 20% discount for a policy of 2 family members and a 28% discount for a policy of 3 family members.

24X7 assistance: We are just a call away for any medical insurance queries or services! Our round-the-clock customer assistance can come to your rescue whenever you need help.

High claim settlement ratio: We take pride in informing you that our claim settlement ratio during the financial year 2023-24 was at an impressive 96.70%. The higher claim settlement ratio shows higher chances of your valid claim getting settled. Also, our claim settlement process is quick and easy.

Online procedures: Our online procedures help you compare health insurance plans, calculate estimated premiums, buy or renew your policies and learn more about policy features and benefits. The paperless policies help you in getting your claims process started immediately.

Tata promise: We have a 150-year legacy of Tata and over 20 years of experience in the insurance sector. Our valued customers have appreciated our trustworthiness and commitment towards our work.