Wealth for health : Medical insurance or your own health fund ?
Let’s find out which one makes more sense

Dipankar Jakharia *

I had a few difficult months looking after my loved ones multiple times in different hospitals. As an attendant, you get to witness closely how the system works in a healthcare establishment. Even the best system in a private establishment takes a toll on you as an attendant.

We are far from an attendant-free hospital and the ease or complexities of it. Govt hospitals are again a different ball game. You need a team of attendants or an attendant with superhuman abilities.

With nuclear families as a norm for the future, this system will also go through changes, I guess. Hospitals need to adopt systems whereby they are not dependent on the patient’s attendant or, at least, gain a trust in that direction.

Another observation was how conflicts arise between insurers and the insured. Cashless claims, inflated bills, room rent caps, co-price sharing, pre-existing disease — these are all new things to worry an attendant. This happens because not enough information was provided to the insurance buyers and the insurance buyers also did not ask too many questions.

I have always advocated buying health insurance for the entire family, without fail. But how about you yourself build a health corpus for you and your entire family? What I am going to preach will only work for young, earning citizens and for those who have already made it big (meaning those who have substantial liquid assets).

Every year the premium prices of health insurance are increasing, indicating the escalating price of healthcare. Today, for a boy or girl of 16 to 35 years, to get a health cover of five lakhs, one needs to spend around Rs. 7,000 per annum. This is still a very good deal. Everyone should go for it.

But as you get older, your family size will increase and with age, your annual premium amount will also increase. There will also be a pressure to increase the premium amount as healthcare inflation is one of the highest.

By the time you reach mid-career, you will see a sizeable amount going to health insurance premium. By that time, you will be struggling with home loan EMIs, along with a few others.

Before you reach that point, let us explore another option, along with the regular premium. What you should do is allocate a dedicated amount in an SIP in equity investment as your healthcare fund. So, you will keep giving your health insurance premium and also keep investing in your healthcare fund simultaneously.

What will this achieve? If you invest the same amount as your health insurance premium, in 20 years time, you will not need any health insurance anymore. Meaning you will have your own dedicated fund to cover your own insurance.

I am mindful of the fact that the five lakh after 20 years will become more than 23 lakhs after inflation. I have also increased your yearly contribution of Rs. 7,000 every year by ten per cent to reach that target. There are many calculators on the internet which you can explore.

The fact that one can achieve one’s own health-care contingency fund is not a remote possibility. It is achievable. But remember, healthcare insurance is an amazing product. Use it when you are young and premiums are less. Become independent of it when you are nearing retirement and the premiums are sky high.