Health Insurance 394 views March 9, 2021

A medical emergency can knock on your door without any warning. In such a situation, you wouldn’t want all your finances to go away towards the treatment. That’s where a health insurance plan can help you by providing coverage against a medical emergency. But one of the most important questions that people ask before choosing a health insurance plan is – how much health insurance cover should they go for?

Health Insurance

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Here, how much means the sum insured amount that health insurance provides. Simply put, the sum insured is the amount up to which a health insurance plan will provide coverage against expenses incurred towards your treatment. First thing you should know that the right health insurance cover depends on the type of policy you are choosing. You can choose a comparatively low sum insured amount for an individual plan as compared to a family floater plan as the sum insured in the latter will float among all your family members.

In this article, we will be telling you about how much health insurance you should buy for individual and family floater plans. Other than this, we will also discuss the factors you should keep in mind when choosing suitable coverage. Keep reading to know more!

How Much Health Insurance is Needed for an Individual and Family?

Health insurance companies provide both individual and family floater plans. In the case of an individual health insurance plan, an individual should choose a minimum coverage amount of INR 2 to 3 lakh if he or she is in the early 20s or 30s. The reason: during these years, the chances of a medical emergency are quite low, and when you don’t make any claim for your policy, your sum insured will only increase with the help of No Claim Bonus (NCB).

However, in the case of a family floater plan, you will need to choose a higher coverage amount as you will be covering your family alongside you. Here, the coverage amount will float among all the insured members. Since the elder members covered under the policy do possess a high probability of hospitalization, it is advised to go for a minimum sum insured of INR 10 lakh for a family of 2 adults and 2 children. If you want to cover a senior citizen under the policy, choose a high sum insured considering the inflation and health risks. Do remember that the premium amount will depend on the eldest member in your family floater policy.

What is the Meaning of Being Underinsured?

One of the most important factors that people often ignore is the risk of being underinsured when deciding how much health insurance should an individual buy. People often don’t know the impact they could face on being underinsured. People can be underinsured in two ways – either they have not enough sum insured or they don’t have cover for maximum diseases.

By not having enough sum insured means having a low sum insured under your policy. So, in case of a medical emergency, the sum insured will not be enough, and you will have to bear the expenses from your pocket. By not having enough coverage means your policy does not provide coverage against a wide range of treatments. So, in case you face a medical emergency and your policy does not provide coverage against the same, you may face financial troubles.

To make sure you are not being underinsured, it’s important to assess your requirements and go through your policy document carefully to see the exclusions. Also, choose a higher sum insured keeping the inflation factor in mind.

Factors to Keep in Mind when Choosing the Right Health Insurance Coverage

The suitable health insurance coverage may vary from one individual to another according to different factors. We are showing all of them below so that you can make a better decision. Have a look!

Premium Affordability

When choosing a health insurance plan, do remember that you should be able to pay the premium towards the policy without hurting your finances. It would not be wise to choose a plan with higher premiums that you cannot afford. One of the efficient ways is to go for a policy with 2% to 3% of your annual income as the annual premium amount. Suppose you earn INR 5 lakh in a year. So, a premium of INR 10,000 to INR 15,000 per year would be okay for you.

Annual Income of an Individual

The ideal health insurance coverage also depends on your annual income. To know the ideal health insurance coverage, you can check the following formulae.

Ideal Health Insurance Coverage = 50% of the annual income + 100% of the last 3 years’ expenses towards medical emergency

Age of the Insured Person

As we mentioned earlier too, the premium of a family floater policy depends on the age of the eldest member. So, a young individual can get a discount on their premium while an individual of 45 years of age or above would need to pay a higher premium.

Family Medical History

This is one of the important factors that also defines the ideal health insurance coverage. A health insurance company will assess the past medical history of all the family members to evaluate the risk. The premium amount for individuals who have a past medical history may need to pay a higher premium amount to get a high coverage amount.

Note – The sum insured amount suggested in this article is purely indicative. Your requirements and affordability can vary, so choose the sum insured accordingly.

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