How to ensure that your parents have adequate health insurance coverage?

While the number of people having health insurance in India has been increasing due to government initiatives, corporates’ initiatives as well as individual awareness; the issue of being underinsured is still highly relevant in this country. Often we have seen the sum assured in a government health insurance is very nominal and that can be like not even a week’s expense in a private multispecialty hospital. Similarly, the group insurance also does not provide much cover. So, if your parents have these health insurance policies, can you be stress-free? The rising cost of healthcare facilities in India requires adequate insurance coverage, especially for your parents. However, how do know what is the adequate cover or how to create the same?

What is adequate health insurance?

An adequate health insurance cover is not a fixed amount. It varies from your parents to another. However, to get a close idea of how much coverage you must-have for your parents can be derived from this calculation below-

Health Insurance cover = 50% of Annual Income + 100% of last 3 years’ expenses on health (hospitals)

For instance suppose your monthly income is Rs. 100000, so 50% of the same is Rs. 50000. Means annually it is Rs. 50000*12 = Rs. 600000

In the last three years, total medical expenses including hospitals for your parents were-

Monthly medicine – Rs. 3000 – Rs. 3000*12*3 = Rs. 108000

Half-yearly Health Check-ups – Rs. 20000 – Rs. 20000*2*3 = Rs. 120000

Hospitalisation – Rs. 1000000

Total = Rs. 1228000.

So, the adequate cover for your parents would be = Rs. 600000 + 1228000

                                                                                                     = Rs. 1828000.

This is a broad idea of an adequate health cover. However, you must analyse the health of your parents, their age, their pre-existing health problems, and healthcare costs in the city you are residing in.

For understanding the amount you need to insure for your parents’ healthcare you can follow these steps –

1. Assessment of the requirements:
   First thing is to assess all your needs. You must also take into consideration inflation and unforeseen events. This will help you understand the amount you need to insure. Taking from the example above, you need to assess your income, then the medical expenses in the last few years. On top of that, you need to consider inflation as well.
   
2. Inclusions and exclusions:
   One of the most important things to check while calculating the adequate cover is to check for the inclusion and exclusions of the insurance plan.

Additional Read: Family floater health insurance plans

How you can build an adequate cover for your parents?

Below are certain things which you can consider for building an adequate health insurance cover for your parents.

1. Senior Citizen health insurance plan:
   You can consider a senior citizen health insurance policy to increase the sum assured for your parents’ healthcare. For these policies, the maximum age is generally up to 80 years however it varies from one policy to another. These policies help you deal with the critical illnesses of your parents. Most of these policies have coverage for annual check-ups and other benefits which becomes necessities for your parents.
   
2. Pre-existing diseases (PED):
   One of the important things you always need to check while buying any insurance is from which year the pre-existing conditions are covered. Even if you buy insurance for your parent of Rs. 5 crores but the pre-existing conditions are covered after five years, then the utility of that high cover reduces significantly.
   
   So, if your parents do have any pre-existing ailment before you opt for the plan, then look for a health insurance plan with a low waiting period for PED; so that they can get coverage at the earliest and there is no compromise on the treatment.
   
3. Super top-up:
   If you want to increase the sum assured for the insurance cover of your parent, you can also use super top-up. For example, if you have a group health cover or an existing health insurance plan for your parents, then you can choose an additional plan for them to provide coverage for an amount over and above your existing limit. However, the super top up plan can be claimed only after the total claim for the year is more than the deductible limit.
   
   For example, if you have an existing health plan of Rs 10 lakhs and you opt for a Super Top Up Plan of Rs 10 lakhs with a deductible of Rs 5 lakhs. In this case, the initial claim up to Rs 5 lakhs need to be claimed from the base plan. All additional claims more than Rs 5 lakhs would be paid by the Super Top Up Plan.

Note: Ensure than your base plan and your super top up plan starts on the same date, if possible to get maximum efficiency of the coverage.

Additional Read: 5 Reasons to Buy Health Insurance if you don’t have one

Conclusion

Your parents must have provided the best life they could offer to you, now it is your turn to take responsibility and provide them the best care possible. What more? You can also avail an additional tax exemption for the premium that you pay for your parent’s health insurance up to Rs 50,000 under section 80D if any of them are more than 60 years of age.

At Tata Capital Wealth our relationship managers and investment product specialist will help you around all the nitty-gritties associated with the purchase of health insurance policy for your parents.