I am 45 years old and the only earning member of my family. What amount of health insurance is adequate for me and my family, and how frequently should I increase this amount?
-Name withheld
Reply by Nitin Deo, Chief–Underwriting, Claims and Reinsurance, Zuno
Congratulations on finally choosing to buy a health insurance plan! It will help if you consider several factors before determining your sum insured. Your primary consideration should be the healthcare cost in your city and where you are most likely to seek treatment. Healthcare costs have grown significantly in the last few years primarily because of the demand-supply gap in India and technological advancements.
The cost of treatment could vary basis your location and the availability of hospitals. These should be the primary factors in determining the Sum Insured. Additionally, it will help if you remember that whatever Sum Insured you choose has to be sustained over the next few years, as increasing Sum Insured frequently is not recommended at your age. Luckily, various plans are available today that offer in-built Sum Insured enhancing features – Cumulative Bonus with protector and restoration of the sum insured. Insurers examine these features in brief below:
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A cumulative bonus is an amount that gets added for every claim-free year. It is usually a percentage of the base sum insured. Plans offer cumulative bonuses ranging from 5 to 50 per cent. As a standard practice, when there is a claim, the Cumulative Bonus reduces by the same percentage as it increases for every claim-free year. There are plans available in the market which include a Cumulative Bonus Protector, which, if opted, would not reduce the Cumulative Bonus even if there is a claim.
Restoration of the Sum Insured is a feature that triggers in the event of exhaustion of the Sum Insured in a particular year. There are several versions of this feature available. The main differential between plans offered by various companies is the trigger that activates restoration. Therefore, it is advisable to go through the details before picking this feature.
Ideally, at this stage, a floater health plan with a minimum sum insured of Rs 15 lakh is recommended for a family of 3.
(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)
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