‘Health equals wealth’. We know how important health is for our happiness, and how our well-being ensures our prosperity in life. Our health is also vital for our nation’s economic progress given that healthy populations translate to a more productive, focused and longer living workforce. We also know that for a healthy life cycle, we need healthy habits like a balanced diet, good hygiene, getting enough mental peace, sleep etc. If an unhealthy person suffers, it is not just him or her that suffers, it is also the dependent people who are unable to meet their daily goals either because of financial reasons or the associated mental stress that comes with seeing a loved one unwell. 

A highly under-insured nation

That said, we typically tend to miss out on a vital step to ensure good health, especially in India. After all, it is not just an apple that keeps the doctor away. In fact, given that India is the world’s second-most under-insured country and has one of the highest out-of-pocket expenditures (OOPE) Indians are more likely to visit a doctor, spend a ton of money, and even face falling below the poverty line easily. It may come as a whopping surprise that the recent economic survey puts India’s public healthcare spending at 3% of our national GDP! That’s a lot!

So why don’t we invest in health insurance? Especially when it is particularly beneficial if we do invest in health insurance early in our lives?

For one, most people in their early lives tend to feel indomitable – they are healthy, tend to be frequented by diseases far less than the senior citizen population, and recover faster from cursory injuries. We never plan for the exceptions. We don’t plan for our future, when we will be frequented by diseases more often, will need medical care more than we did in our early lives, and will take longer to recover from even the minor injuries. For another, we are not aware of the benefits that buying health insurance early on brings for us and our loved ones. Finally, even if we have been taught to save money for times of emergencies, we never know if that amount is going to be enough to cover all the necessary expenses when the time comes.

Which is why in this blog, I would like to offer you two scenarios to clearly get a picture of the pros and cons of buying health insurance early versus buying it later in your life. Spoiler alert – you are going to be surprised by the differences in effects on your financial life for sure! 

But first, let us go over the key reasons why you should buy health insurance early on.

BENEFITS OF STARTING EARLY

• • Easy to acquire: As mentioned before, when a person is young, the odds of having a medical condition is far less than when he or she is older. Which is why when a health insurance is acquired for the person, chances are more of the premium quote being lower. This is because health insurance providers tend to offer an insurance plan at a lower rate if the health risks are lower for the individual. 

• • Less or no medical examinations: Major health risks and pre-existing conditions such as diabetes, heart diseases, kidney failure and more tend to be lower for people under the age of 25. And health insurance companies not only make people go through mandatory health check-ups, they also reserve the right to reject an application if the risks are high for an individual. Which is why when you choose to get a health policy earlier in life, not only will your application not get rejected, you will also not have to undergo medical examinations to get a good insurance plan.  

• • Less or no waiting period: Generally health insurance plans have a typical waiting period to assess the health risks associated with an individual. If you are young, chances are that you have no pre-existing conditions and as such, you may not have to go through a long waiting period to get the coverage benefits. 

• • All illnesses covered: Given the low health risks at a young age, you get access to a comprehensive and holistic coverage of insurance. This ensures that you are also in a better position to be secure during your employment years, and even be safe financially for when you retire.

• • No co-pay (co-payment): Health insurance comes with co-payment requirements meaning you also bear a part of the expenses with the insurer for any health expense. When you are older, you are required to bear a certain percent of the total cost. However, when you are young, you do not have to bear any costs as the entirety is covered by the insurance provider. 

STRUGGLES OF STARTING LATE

• • Lots of prerequisites: Given at a later age you may have high risks of pre-existing conditions and long-term diseases like diabetes, heart risks and more, you will have to overcome several prerequisites and opt for add-ons to ensure you get comprehensive coverage.

• • You may or may not get insurance: As mentioned before, if your risks are high, health insurance providers reserve the right to reject your application for health insurance. 

• • Multiple waiting periods: To assess the several risks you may already have, you may have to undergo several waiting periods and medical exams before your coverage can come into effect.

• • Not helpful in need: Given the several vulnerabilities your body is already exposed to, you may not get the exact coverage you need in times of need or emergencies.

• • Co-pay after 60: High health risks means chances are you may have to share a high percentage of the expenses with the insurer for your medical treatments.

COSTS ASSOCIATED WITH STARTING EARLY VS STARTING LATE

If you may have guessed already, it is not only the risks of starting late, the costs associated with starting late also are high. If you want a clear picture of how high, a simple comparison can help. To begin with, people who invest early not only invest less, but also earn more given they don’t have any expenses for family, children or buying a house. When you start late however, you may or may not have long-term savings, but what’s certain is that you definitely have to invest more, at the same time your associated expenses cut down the margin of monthly savings. 

For instance, if you are 35 with low health risks, you may have to invest INR 10,000 per month. The total principal invested by the age of 60 (age of retirement) for a maturity pay out of INR 1.8 crore will be INR 30 lakhs. At the same time, if you are 45 with high health risks, you will have to invest nearly INR 35,000 per month. By the age of retirement for a pay out of the same amount (INR 1.8 crore), your total principal invested will be INR 66 lakhs. To put it in perspective, that is more than 2X than what you would have paid only 10 years before!

BOTTOM LINE: YOUR SHIELD AGAINST UNCERTAINTIES

The 2020 COVID-19 pandemic has been proof of how important health – i.e., physical, mental and financial health – are in our lives. A huge treatment cost can take a heavy toll on all three, if comprehensive health coverage is not present. It has also made us come to terms with the fact that shielding against uncertainties is a vital aspect for not only us, but also the loved ones in our lives. 

After all, why shouldn’t you opt for health insurance in the first place?

A huge benefit of health insurance other than holistic coverage during uncertainties is that you get admittance to thousands of hospitals across the country that are partnered with several health insurance providers for such an exact situation. Secondly, several insurance providers also provide cashless facilities and fast-tracked claim settlement which ensures that you get the needed amount at the right time, with the convenience of instant digital payments. Another advantage of starting early is that most insurance companies offer a ‘no-claims benefit’, which helps with increasing the total sum insured/pay out, if you haven’t had any medical incidents within the term period. In fact, you can also enhance the coverage of your plan with the help of additional rider plans that include everything from critical illnesses, OPD (outpatient department) covers, maternity covers to room waiver, ICU waivers and more. Which means you can customize your plans as per your specific health situations. Finally, you also get an income tax exemption under Section 80D, which helps you save substantial costs in renewing your health insurance. 

It goes without saying therefore, that getting health insurance at an early age allows you to make the most of your insurance investments – from affording health coverage for a wide range of emergency and medical scenarios, to also saving money for the long term.