How much health insurance coverage do you need?

Last Updated: Tue, Mar 20, 2018 13:13 hrs
Health Insurance (Image Courtesy: bankbazaar)

With a steady increase in the cost of healthcare treatments and double-digit medical inflation, it is important to have sufficient health cover in order to get timely and adequate healthcare services when you need it the most. How much health insurance coverage one needs can be determined based on 3 factors - affordability, medical history, and entry age of the insured member.


In your 20s, you may not be able to afford a high premium and therefore, will most probably settle for an affordable health insurance policy with a low premium and low coverage. Once you cross the mid-30s, you have higher chances of contracting illnesses. Therefore, you may require frequent medical treatments, hence, more insurance coverage is needed. Luckily, in your mid-30s, you may also be in a financial position to afford a high-premium policy that offers comprehensive coverage. Thus, depending on one's affordability, he/she can decide how much health insurance coverage to get. The same is applicable to life insurance policies as well. As your net annual income increases, you can afford to purchase a life insurance policy with a high premium and enhanced coverage. Keep in mind, non-payment of the insurance premium or failure to renew your insurance policy on time will result in discontinuation of the plan. Like health insurance, motor insurance plans such as four-wheeler and two-wheeler insurance policies must also be renewed every year to enjoy continuous protection.

Medical history

At the time of purchasing a health insurance plan, you are advised to get a regular health checkup/medical test done. It is imperative that you disclose any pre-existing disease/ailment to the insurer so as to avoid a hassle when making a claim in the future. Pre-existing conditions include those ailments or illnesses that you may have at the time of policy purchase. There is a waiting period of 2 to 4 years for pre-existing conditions. When choosing health insurance coverage, take your family's medical history into account. If you have high chances of contracting a critical illness like a heart attack or a cancer of specified severity, then you can opt for a critical illness rider to boost your health cover. Or, if you decide to start a family, then you can opt for a maternity benefit cover as the waiting period for maternity coverage is long. Therefore, the earlier you purchase the cover, the sooner you have the coverage. Life insurance coverage can also be enhanced by attaching a critical illness rider, personal accident cover, or an accidental dismemberment or disability cover to the base policy. In the case of motor insurance, you can purchase riders such as zero depreciation cover, key replacement cover, and engine protection cover to boost your car insurance coverage.

Age and lifestyle

Insurance experts advise customers to purchase health insurance policies at a young age to enjoy certain advantages such as a low premium and more number of no-claim years. The same is applicable to life insurance policies such as term insurance plans, whole life insurance plans, unit-linked insurance plans (ULIPs), etc. Life insurance premium is determined based on the entry age, lifestyle habits, occupation, and gender of the life insured. For instance, a policyholder aged 25 years will have to pay Rs.8,000 for a term plan of 30 years while a policyholder aged 30 years will have to pay Rs.10,000 for the same term plan. Therefore, purchase a life insurance policy at a young age to enjoy a lower premium. When it comes to health insurance, older people are said to be high-risk than younger people as they have higher chances of contracting illnesses than youths. Insurance companies reward policyholders with No-Claim Bonus for every no-claim policy year. The accumulated No-Claim Bonus can be used to get a discount on the insurance premium for the subsequent policy year. This is true for motor insurance as well.

In conclusion, how much coverage one needs depends on his/her age, lifestyle, medical condition, and income. In the case of life insurance, opt for a term insurance plan if you are looking for just death benefit. If you want protection as well as savings, then opt for a ULIP or an endowment plan. In the case of motor insurance, purchase a comprehensive car insurance policy that offers protection against third-party damage and any damage to you and your vehicle at a reasonable premium. In the case of a health insurance policy, choose one with a low premium, sufficient coverage, low waiting period, and a high sum assured. Whether it is life insurance or non-life insurance (general insurance as it is otherwise known), ensure you compare various insurance policies across the top insurance providers in the country in order to get the best insurance policy in the market.

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