Health care costs are fast rising due to soaring inflation. Soaring medical costs can best be tackled with the help of a sufficient health insurance cover for yourself and your family, as this helps in meeting sudden medical emergencies.
However, many people fail to plan for an important aspect of health insurance – the premium. With rising inflation, not only are health care costs rising, but also health insurance premiums. This is because health insurance companies are forced to shell out higher amount when there is a claim due to soaring medical costs. This is passed on to customers in the form of a higher health insurance premium.
How can you as an individual plan to meet these rising premium payments? Here are some tips to plan health insurance premiums considering inflation:
Build a health corpus by investing in equities:
Over the long term, return on equities beats inflation levels. By regularly investing in mutual funds in the form of Systematic Investment Plans (SIPs) over the long term, you should plan to build a health corpus for later years of your life. Usually health insurance premiums are very expensive when you cross 60 years of age. This is when you can make use of this corpus and reduce your sum assured on your health insurance. This can reduce a high health insurance premium and offset inflationary effects.
Invest in blue-chip dividend stocks or mutual funds:
As mentioned earlier, equities give good return over the long term. By investing in blue-chip stocks which pay regular dividends or dividend schemes of equity mutual funds, you can be assured of regular dividend inflows. This dividend amount can be used to pay the additional health insurance premium, which has risen due to inflation. However, take your risk appetite and risk tolerance into consideration before you invest in equities.
Increase your cover progressively:
It is advisable to buy a health insurance policy when you begin your career. As you are young, the premium you pay will not be much. Also, this is a time when you are either unmarried or have a small family. You can increase your Sum Assured cover progressively as your family size increases. However, do not compromise on the total Sum Assured if you think it is inadequate. Alternately, you can opt for a top up policy which works out cheaper than a new policy. You can also consider taking a lower basic health cover along with a critical illness cover.
Select insurers carefully:
When you select the insurer, do not look only at the premium costs. You can save a lot of costs by looking at additional features. For example, some insurers increase premiums if you have exercised a claim in the previous year. Such policies should ideally be avoided as you will be paying an additional premium, in addition to premiums rising due to inflation. Another option is to choose policies which offer a discount in premium in case of no-claims. This means when you do not claim policy benefits in a particular year, you can get a reduction in your premium in the subsequent year.
Check for premium increase in higher age groups:
Mostinsurerscharge a higher premium for higher age groups. This can cause a double whammy when premiums are anyway rising due to inflation. So you should try and choose policies which have a constant premium for all age groups. Policies by some nationalized banks, which are taken in association with public health insurance companies, offer a constant premium even when you reach a higher age bracket.
Split the cover across insurers:
Instead of taking a health cover with a single insurance company, you can consider splitting it across 2 companies. For example, instead of taking Rs. 10 lakhs cover with one insurer, you can take Rs. 5 lakhs each of health cover with 2 companies. Not all companies increase premiums uniformly. Therefore, you can benefit from a lower price increase if you split the cover. Although this is not a definite way of reducing your outflows, there are chances that the two separate premium payments will be lower than a single premium payment.
Health insurance premium is an essential expense head in your personal balance sheet and you should give it the importance it deserves. By planning well in advance for the rise in premiums, one can manage such increase in outflows effectively.
Bankbazaar.com is a secure online platform where you can compare the rates offered by various health insurance companies to choose the best plan for you.