Subramoney

Recently, a friend of mine wrote a cheque for Rs 14,45,000, the sum total of the hospital and care bill for his father. And this amount was spent in less than six months. At least, this friend works in a great company has a great salary, and a very, very high savings rate. He knew exactly where this money would come from, which was from his bulging equity mutual fund portfolio.

If this were to happen to somebody dependant on you, who will pay the bill?

You?

Your employer?

Your children?

Your children’s inheritance?

Your spouse? In case you do not know ‘Who’ is going to pay such a bill if you are the earning member, look at ‘medical insurance’. When we think of insurance, we think of tax breaks. Or a favor to some relative who is not so well off or a colleague’s wife who is pushing you to do her a ‘favor’ to cover the minimum number of lives. If you are in that category, wake up. You need ‘medical insurance’ today. Considering the increasing costs of medical care in India, it is becoming necessary to have a safety net, for individuals to fall back on, in case they face an event of hospitalization following a medical emergency.

In case, you are wondering how this bill went as high as Rs 14 lakh, join me. I also wondered, then had a peek at the bill – hospital bed charges, nursing, nursing at home, medicines, assisted living, the works. Lack of good quality financial data, collection and analysis is not available in Indian conditions. Take a look at the statistics in the US and you will be scared. More than 40% of the people who needed assisted living were working people. Long-term care insurers have so far paid USD 6 billion in claims. The cost of medical treatment is a definite burden on the resources of an individual, whether salaried or self-employed. They may deplete or in major cases, wipe out the entire savings of a household. In India, the insurance industry as well as the medical fraternity would love to have details on the average age of the cardiac patients, the average age at which cholesterol becomes a cause for worry etc. However, we have no reliable statistics. As a wealth consultant, I do come across many persons under 40 who have diabetes, cholesterol, stress, but still live in denial when it comes to having general insurance on their own.The average costs for cardiac ailments/ procedures are in the range of Rs. 15,000-20,000 for angiography and upward of Rs 2,00,000 for angioplasty, with CABG (coronary angio bypass graft) costing upward of Rs 3,50,000. For major orthopaedic procedures like replacement of joints cost upward of Rs 1,50,000 and even routine procedures like fistula, hernia do cost in the region of Rs 75,000. These costs are quantifiable, and transferable at a premium, why not avail it when you can? In case, you are already afflicted by some disease, the medical insurance will no longer be available. At that stage all you can do is repent.

If you are young, this is the time to take insurance. In case, you are supporting (or likely to support) some elder relative, it makes sense to take medical insurance now. Do not wait for the disease to strike.

The most common excuse I hear from people is, ‘My company covers me through a group policy’ so I do not need to do anything on my own. This is not a good logic. What happens if you are between jobs? What happens if you are 38, dependant on your spouse’s company policy, and there is a divorce? Or your spouse dies? Will the group medical insurance kick in for the widow (er) of an ex-employee? What happens if you decide to start your own business? What happens if an American company wants you to be their representative in India and run a one-man office? There are just too many imponderables because of which you need to take and own the policy rather be dependant on your employer. The easiest thing for a medical insurance agent to tell you is ‘Ha, I told you so’ after the event occurs. Believe me, it is not pleasurable and a good insurance consultant would treat it as a communication failure – in not being able to convey the importance of the message before the event. Apart from these ‘insurable’ costs there could be other costs for which you need to create your own kitty – nursing, adult diapers, special equipment, assisted living etc. In India we still do not have ‘long-term care insurance’ and this means you have to find your own solutions to such problems.

The medical insurance market offers many of the shelf products to most people – and the premium is likely to go up in the near future. Once there is detariffing of the premium, you will see many innovative products, but nothing is likely to be cheap. However, when you think you might end up staring at a bill of Rs. 20 lakh, start early.

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