Medical treatment is becoming expensive day by day. One of the segments that is affected the most because of inflation in medical costs is of old people. Certain diseases are notorious for their onset as one ages. Years of hard work, stress and physical toil affects health in many ways. While the risk of falling sick with a chronic ailment or need for surgical procedures grows with age, the segment is known to be completely unprepared financially for these requirements. This is because of lack of savings as money is required for household and living expenses as well as poor insurance coverage of this segment.
In this article, we’ll try and understand why health insurance makes most sense for old people and how youngsters can prepare well in advance for future medical expenses of their parents.
Under-insurance among the elderly
One of the reasons why a lot of older people lack proper medical insurance coverage in India is because they keep putting off buying medical insurance until they are older. However, once they reach a certain age they might have to deal with the onset of some age-related diseases like cataract, arthritis or cardiovascular disease and sometimes end up not being eligible to buy medical insurance at all.
Another reason is misplaced priorities. While older people save for social events in life like education or marriage of their children, they de-prioritize preparing themselves for known medical costs in future.
Among those who did buy insurance in time, the nature of problem is a little different. Most people start their health cover 10-20 years before they hit retirement. But strangely, majority of such individuals buy small covers of 2 or 3 lakhs only. While this set of people realize the importance of insurance, they invest very less into it and continue to hold on to small covers for decades which does not keep pace with medical inflation or their actual requirement.
What can youngsters do to change this situation?
Young people whose parents are going to retire in near future or who have parents beyond the retirement age must make timely provisions to prepare well in advance for life’s uncertainties. There are three options they can explore to provide adequate health cover for their parents.
- Cover your parents in group health policy if your employer offers you this option
- Buy dedicated cover for your parents directly from insurance company
- If your parents already have a policy, review their coverage and enhance their sum insurance on need basis
Let me spend some time on each of these options.
Corporate India has evolved, and a lot of employers offer health insurance cover to their employees from the date of their joining the company. This is an additional employee benefit offered by company which may or may not be chargeable to the employee. Some of these companies also extend this cover to parents of the employees. If this benefit is available, the employee must enroll their parents by sharing their details with their HR. While some companies offer to cover parents of employees at no extra cost, many others make it optional and charge the premium to employees. Due to lack of awareness, many employees either miss enrolling their parents in such schemes, or they try to save money by willingly not enrolling their parents.
The biggest advantage group health insurance (GHI) offers is that all pre-existing illnesses your parents may be suffering from before the start of the policy are also covered by GHI, therefore it makes sense to by default cover your parents in such a scheme. Some employees reckon that their parents also have a personal insurance policy, so why bother covering them in GHI. But what they miss to notice is that their GHI may be offering better plan than the one their parents currently have, or that GHI will complement their personal plan, so if the sum insured in personal policy were to get exhausted, GHI would come handy to cover additional burden of higher hospital bill.
Now even if you have added your parents in your employer’s GHI, it makes sense to buy a dedicated health plan for parents. I say this out of very simple reason that you may change your company, or your company may one day decide to reduce the parental insurance cover or completely discontinue that benefit. What will you do that day? You will wish that you should have bought a plan when you had the chance. Medical costs are so high today, every opportunity you get to either reduce them or mitigate them using insurance should be exercised.
Insurance companies allow children to buy insurance for their parents. You can be the proposer in the policy and directly buy cover for parents. Once the person’s age crossed 45, many insurance plans require a health checkup before issuing the policy. If your parents don’t live with you and it may be unviable for you to get their health checkup done for buying policy, there are insurance plans in the market where health checkup for buying insurance is not required. All that you need to do is honestly declare your parents’ health history completely in the proposal form. If there is nothing significant in their health history, you could buy insurance cover without needing your parents to be around. Best part is you can upgrade this cover as and when you feel the need or as your parents’ age progresses.
In cases where your parents already have a health policy, it is important to check the coverage and revisit the need to align the sum insured with their medical requirements. For examples, if your parents have a known medical condition for past 4 years or more and their insurance cover is 4 lakhs or lesser, you must advise them to upgrade their cover to 7 lakhs or more. What it would do is given them a better eligibility for room category in the hospital as well as a bigger cover to claim as their health risks increase in future. As a rule of thumb, if you stay in a tier 1 or tier 2 city in India and your parents are in the 60-65 years age band, you must get them a 10 lakh or more cover.
Important factors to consider when buying health policy for parents
Deciding to buy a medical policy is normally a hard process that requires careful attention to the details of the policy and how it affects your parents’ lifestyle and life situation. However, there are some factors you must keep in mind while making your choice.
One of the primary factors you should consider when buying insurance is the limit on the room rent. The limit of the room rent in the policy covers the rent of the room charged by the hospital and nursing charges for that particular ward. Deciding on the room rent is important because it will impact what kind of hospital ward your parents would be eligible to be admitted in if they were to be hospitalized. The room rent limit can significantly impair the health insurance cover provided as insurance companies not just deduct room charges over and above your room limit, but also deduct a percentage of the hospital bill from the claim proportionately as per the room rent limit.
Another factor that should be considered is Restoration benefit in the policy. It is a clause in some medical insurance policies which provides extra coverage in cases of extraordinary medical problems. If the sum insured in the policy is exhausted during the policy period and there is another hospitalization, then the policy restores the sum insured in the policy at no additional cost. The only condition applicable is that the hospitalization should be for a reason unrelated to any previous hospitalizations during the policy period.
Clauses like No Claim Bonus (NCB) improve the attractiveness of the health insurance scheme. As per this benefit, for every year in which a claim is not made, the insurance company adds some extra amount of cover to the policy at no additional cost. This is to reward customer for maintaining good health. You stand to benefit as the total sum insured keeps increasing with this clause and more amount is available to be claimed in the event of a hospitalization.
Due to higher risk of hospitalization among the elderly population and increasing medical inflations, lack of sources to fund the treatment of your parents can severely jeopardize their ability to access quality healthcare. There are multiple options available to you to provide medical insurance to your parents or enhance their cover if they already have some form of health insurance. There are benefits in the medium to long term as appropriate level of health insurance cover of your parents will protect them from unforeseen and increasingly unmanageable medical treatment expenses. It’s wiser to take an action today and not repent later when you have the opportunity.