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by on May 25, 2010
There is a saying that “an apple a day, keeps the doctor away…” but this does not apply in today ‘s world . First of all, not everyone can afford to have an apple a day and even if people, who can afford, eat impure apples, get sick and then meet doctors. End of the day, we meet doctors more regularly even more than we meet our near dear ones. Do some calculations on your own and find out, how much money you spend on monthly basis just to visit doctor, buying medicine and getting the RECOMMENDED test done. Don’t take into account any hospitalization cost you incurred, else you may well have a high BP.
India vs USA
Bottom line, The medical expenses are increasing day by day, there is no escape to this. You will be astonished to know that in US, 15% US GDP is all spent on medical cost. 15 % of US GDP means, close to double of India GDP which is over Rs. 5,60,000 Crore. In US 15.3% population is not insured by health cover & another 35% of the population is under insured but in India 88% of the population is not covered by health insurance. Medical expense are now on the rise in India as well. In today ‘s fast moving and fast earning life, we spent our half working life in 5 star hotels and half in 5 star hospitals. There lies a huge risk with everyone about medical cost hitting ones finances in such a bad way, that at times, it is beyond repairable. We meet many people who sell even their house/gold or withdrawing from retirement savings just to cover the medical cost. In such a scenario, one has to cover themselves from such a risk and get a good Medical cover in the form Mediclaim policy.
What Mediclaim Policy covers
Mediclaim policy covers against hospitalization cost one incur, provide one is admitted for more than 24 hours. It covers various cost during hospitalization including that of medication, surgery, room cost, ambulance etc. It also covers the cost you incur on medication, test, doctor’s fees etc. 30 days and 60 days post hospitalization provided the cost is incurred for the same cause for which one is hospitalized.
Who provide Mediclaim policies
Mediclaim Policy is typically offered by General Insurance Companies & health insurance cos. both in public domain. There are many life insurance companies that also offers such similar products but it is better to take policy from specialist.
Type of Mediclaim Policies
Predominantly there are two types of medical policy available. The most common way of taking such policy is where, you buy a specific coverage called sum assured for each of the family members for which you want the cover(Individual Plan). The other way of taking the policy is that you buy a sum assured not specific to any particular person in the family but for the whole family, this is known as Floater Policy(Family Plan).
For example, a family of four, husband, wife and 2 kids. One may take Rs. 1 Lac cover for each of the person and if any one meets with casualty and is hospitalized, the insurer will pay up to the limit specific to the person. But if you have taken a floater policy, you buy a float cover, let say of up to Rs. 3 lacs for the entire family. Now if anyone in the family, meets with casualty, the cover is up to Rs 3 lacs. But if one has fully used that float, then for that year, insurance company will not pay anything if either the same person or someone else family incurs hospitalization cost.
Special policies for senior citizens are also available. Consult a Certified Financial Planner near you before taking the policy because it’s important to first judge your requirement & then select best suitable policy.
Claim settlement process
There is a myth that taking claim from insurance companies is to difficult. Yes, it is, if you are not aware of methodology and at times, many people file claim for something which they are not covered for or not informing insurer at the time of hospitalization(in case of cashless claims). The system is such that most of the insurance company has a TPA (Third Party Administrator), TPA is an outsourcing agency of Insurance companies that services claims. Once the policy is taken, insurance company issues card to the Policy holder with name of TPA on it. Policy holder have freedom to select it from list of TPAs with insurance company. In case, one meets with casualty, he/she has to produce the same card in hospital. Earlier, there was a system of reimbursement of expense where in you first spend the money from your pocket and then apply for claim. Now, TPA offers CASHLESS arrangements with many hospitals. if you get admitted such hospitals, the TPA would directly make payment for which you are entitled and hence there is no problem of you arranging Cash immediately.
Tax Benefits on Medicalim Policies
Mediclaim Policy offers tax benefit as well under section 80(D) when premium is paid by any mode other than cash. A person who is 30% tax slab can income tax upto Rs 12360 by paying Rs 40000 as premium. Check Table:
Users of financial products make costly mistakes, either they buy costly life insurance policy or they ignore cheap Mediclaim Policy and then incur huge cost. Choice is yours
About The Author
Hemant Beniwal is Principal Financial Planner at Ark Financial Planners. His firm serves Indians across the globe. Apart from developing Financial Plans and guiding clients meet their Financial Goals; he keeps interest in research & analysis of various financial products. His Articles, Quotes & Query Section regularly features in leading Newspapers & Magazines.