I am 57 years old and have no previous history of illnesses. Can you suggest how can I get medical insurance with coverage of ₹10 lakh while minimizing the premium cost as much as possible?
— Name withheld on request
Health insurance premiums increase with age. If you are looking to lower your premiums, you can choose one of the following restrictions: co-payment, deductibles or room rent capping. Such restrictions reduce the claim eligibility, thus help in reducing the premium.
Co-payment is the most straightforward. For each and every claim, the insurer would deduct the proportionate co-payment amount. So, if the co-payment is 10% for a claim of ₹10 lakh, you would be eligible to receive ₹9 lakh.
Deductible stipulates an absolute threshold beyond which a claim becomes payable. If the claim amount is below the deductible, nothing is payable. You could choose for an annual aggregate deductible of around ₹25,000.
Room rent capping is the least preferred option, as the adjudication process is more complex. However, if you manage to get a hospital room within the room rent limit, then there would be no deduction at all. For example, if the policy provides for a room rent of ₹5,000, and you opt for a room costing ₹10,000, then you may face deduction of approximately 50% on the overall bill amount. However, if you opt for a room costing ₹5,000 or less, then there would be no deduction.
Do note that none of these conditions reduce your ability to claim for a certain ailment, or restrict the choice of hospital.
I am 32 years old and my monthly take-home salary is ₹70,000. I allocate 40% of this amount towards household expenses and currently have no liabilities. My dependents include my parents, wife, and a child. How much life insurance coverage should I consider obtaining?
— Name withheld on request
The general rule of thumb is to buy a life cover equal to ten times of one’s annual income. Considering the take-home salary of ₹70,000, your gross income is estimated around ₹80,000 per month or ₹9.6 lakh per annum. Accordingly, you should consider buying a sum assured of ₹1 crore or more.
At your age, an insurer may be willing to offer a higher multiple of coverage as well, up to 20 times. If you expect your annual income to increase substantially over the next few years, then you may want to consider a sum assured between ₹1 crore and ₹2 crore. This will help you plan more efficiently for the future.
Do note that life insurance premiums are locked-in at the time of entry. The premium would remain fixed for the entire duration of the term.
Abhishek Bondia is principal officer and managing director at SecureNow.in.
Updated: 22 Jun 2023, 10:23 PM IST