“I was not aware of this condition until I got hospitalized. I was leading a normal life and then, all of a sudden, I was pushed out of action for almost four months. Soon after the diagnosis, I had to do a lot of running around—first trying to find a good surgeon and then a bed in a bigger hospital. For almost one-and-a-half days, I could not get a bed in the desired hospital even in a city like Mumbai,” Gajaria recounts, adding that the diagnosis came as a shock.
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Yet, what helped Gajaria during this traumatic period was his health insurance policy. In fact, he had two of them as also two top-up covers and he could also avail of a no-claim bonus. His total coverage was ₹89 lakh. The cost of his treatment came to ₹17.71 lakh.
Having adequate medical coverage alleviates the mental trauma associated with hospitalization and the financial implications, as in the case of Gajaria.
“When you are unsure about the treatment costs, you can’t think straight. It impairs your judgement on the best course of treatment. The strain and stress of financial problems can worsen the illness,” says Gajaria.
The impact of a sudden illness, in most cases, is however not limited to the patient themselves. In Bangalore, Ravi, who declined to disclose his full name, had to literally step into his father’s shoes overnight and take on all the responsibilities of a head of the family when the latter was diagnosed with advanced stage brain cancer (Glioblastoma Multiforme) in 2013. Ravi was just 25 years old at that time.
“I was pursuing my PhD in computer engineering then and, needless to say, was totally unprepared to take decisions involving medicine, finances, and other things. I felt helpless on many occasions,” says Ravi.
What came in handy for Ravi was the multiple health insurance policies that had been bought by his father, who had also kept a separate health emergency fund of about ₹18 lakh. Though his father did not survive the ordeal, the policies and emergency fund helped cover the treatment costs. “He also had four policies that paid ₹1,500-2,000 per day of hospitalization,” says Ravi. The total cost, right from diagnosis to his father’s funeral, came to ₹20 lakh. Of this, the insurers reimbursed Ravi a sum of ₹5 lakh .
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However, just having an insurance policy doesn’t automatically take care of all your financial worries. For one, you could be underinsured. In Ravi’s case, he feels that having too many policies with smaller covers wasn’t a prudent decision. “My father did not want to pay the inflated premiums and hence opted for multiple policies.” Also, the hospital that he chose for his father’s treatment did not support cashless claims, which added to his challenges. “All insurers settled the claim with some deductions but took a lot of time and requested frivolous information. In one instance, the doctor was asked to give a lengthy explanation,” Ravi said.
A critical illness cover would have been useful here. “A critical illness cover is a benefit policy, as opposed to an indemnity policy that is a medical insurance policy, that pays out the sum assured as a lump sum post the diagnosis. A lump sum helps cover situations where the medical insurance policy cover falls short or the patient goes on leave without pay after hospitalization,” said Suresh Sadagopan, principal officer, Ladder7 Wealth Planners.
Does that mean everyone should buy a critical illness cover? Sadagopan said it should only be need-based. “If there’s a history of a particular illness in a family, then a critical illness policy that covers those conditions will be very useful. Having said that, it is common these days for people to contract cancer or other serious illnesses even without a family history.”
One can look at buying a robust medical insurance policy and at the same time build a sizable medical contingency fund. “Some people are overly worried about illnesses and want to cover all their risk by taking multiple policies. The more policies you have, the higher will be your premium. You can either keep paying high premiums or invest for your goals. A better approach is to cover the risk to the extent required through a medical insurance policy and build an emergency fund instead of buying a critical illness policy for each family member,” said Sadagopan.
That is exactly what Delhi-based Vaibhav Kumar has done. The 40-year-old tech professional has a group health insurance cover of ₹10 lakh provided by his employer and also a separate contingency fund. So, when his mother, Jyoti Ghai, was diagnosed with cervix cancer in 2017, his insurance policy covered 85% of the total treatment cost, while he paid the remaining 15% from the contingency fund. “We did not feel the financial impact at all, which, in my opinion, can be huge if you are not well prepared. One can even fall into debt.”
Financial experts would argue that a ₹10 lakh group cover is insufficient and relying only on company-provided insurance may not be a good idea.
Kumar disagrees. “Making claims through a corporate cover is much easier and the process is smooth, as opposed to a personal health cover. Besides, I’m already paying a premium of ₹50,000. And it makes better sense for me to create and have control over my own corpus.”
Nishant Batra, chief goal planner, Holistic Prime Wealth, and a mutual fund distributor, says a medical fund should not be seen as a replacement for health insurance. “It should complement insurance because the latter will not cover everything. Similarly, a corpus doesn’t replenish the way an insurance cover does, so it shouldn’t be the only option,” he said.
A medical corpus is also helpful to those who may be unable to get a standalone insurance cover due to an existing illness. In Delhi, a 26-year-old marketing professional, who did not wish to be named, said he failed to secure a health insurance policy because he has tuberculosis. “After I had two lung surgeries in 2018, I tried to buy a health policy but was refused because of a two-year waiting period. Currently, I am relying on employee health insurance provided by my company,” he said.