There is no substitute to Health Insurance during a medical emergency. Medical loans come to your rescue when you do not have a Medical Insurance or your medical bill exceeds the sum assured.
Heath Insurance is an excellent product to meet future medical emergencies expense. It protects you by financially supporting you during complex treatments as per the coverage size in your policy. However, if you do not have a Medical Insurance or your medical bill exceeds the sum assured or if you fall short of liquid cash, a medical loan could come handy to settle the bill.
While there are generic loans such as Personal Loan available in the market, medical loans are your go-to product in emergencies as the process of sanctioning is less time-consuming and less cumbersome.
Before you opt for a Medical Loan, here are five things you must keep in mind.
Usefulness Of A Medical Loan
A Medical Loan can be applied for surgery, therapy etc. for any condition which is listed among the pre-approved treatments offered by a loan provider. A medical loan is unsecured in nature and comes with an interest rate lower than Personal Loan.
Difference Between Health Insurance And Medical Loan
A Health Insurance provides you coverage for treatment cost matching the sum assured. When customers do not have adequate insurance and the treatment bill exceeds the sum assured, the difference amount can be met through a medical loan in case of insufficiency in liquidity. Individuals solely depending on corporate insurance may find medical loan handy if the sum assured is not sufficient to cover the treatment cost at any point.
Eligibility And Processing Time
Since personal and medical loans are not linked to bank collaterals, banks typically look for a Credit Information Bureau (India) Limited (CIBIL) score of 750 and above before sanctioning a loan. However, if the loan amount is relatively high, the lending party might ask for collaterals or third party guarantee. You will also have to furnish a salary certificate or a self-employment certificate.
Medical loans are usually made available within 24-72 hours of the application, subject to document verification. The documents that you require include a completed loan application form, a passport size photo, a valid proof of identity and proof of residence. Some banks and NBFCs may require you to bring along a co-borrower to strengthen your chances of securing the loan.
Interest Rates And Loan Tenure
Interest rates may vary between 12% and 24% per annum. In exceptional cases, the aggregators charge up to 36% due to intermediation cost. The treatment amount is paid directly to the hospital and the loan period usually varies between six months and five years.
The loan amount is paid by the lender to the hospital directly. The repayment is done by the customer over the loan tenure in the form of Equated Monthly Instalments (EMIs).
EMIs for personal medical loans are usually fixed for the tenure of the loan. Each EMI repaid has a certain interest and principal component. The initial EMIs typically have a higher interest component in comparison to the later ones.
While at a moment of urgency, you must prioritise arranging for funds, read the fine print carefully and consider the associated charges before you decide upon a product.