Planning for parents’ expected health problems can be quite a tough task. It is mainly because there is no assurance about the amount that one might require — a truism for any health problem at any age but with ageing people this risk is much higher. As a result, many of us face situations where we helplessly have to divert funds from our savings’ kitty to fund an emergency.
The expenses for a common disease today, even if you opt for a normal nursing home in metro cities, is almost a lakh. Hence, it is always advised you have medical insurance. This, not only is an easier way of funding medical needs, paying smaller premiums also saves you from eroding your savings for the future. But it may not be enough.
With an insurance cover, you pass on the risk to another, by paying a premium. Most salaried individuals have a health cover from their employers. These covers sometimes are for their parents, too. But these days many companies are doing away with covering parents or are providing lesser cover / benefits for parents. This is because the cost of covering employees has risen sharply due to higher claims from their parents.
If you have an employer provided health insurance, the most important thing is to estimate if the cover is sufficient for all the family members.
Some, who do not get a cover for their parents from their employers, need to work towards setting a contingency fund to take care of such situations. This is a good substitute to a medical insurance policy. But again, it may not suffice amd may not be a replacement for a proper cover.
This is so, because an elderly may require medical attention several times and in quick succession. The costs, consequently, can be rather steep. Moreover, when you save a part of your salary towards these expected expenses while taking care of other goals also, there is only so much you can save. But the patient could require much more. Therefore, there is just no alternative to an adequate medical cover for everyone. Fortunately, there are many options available.
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For one’s parents, the options may be limited and an appropriate policy needs to be carefully chosen. What is it that one needs to look at when parents have to be covered?
Coverage age: Check the age till which the policy covers the insured parents in this case. Is it till the age of 70 or 75 or 80 or is it lifelong. This is a very important parameter. If the policy terminates at 70 or 75, your parents will be required to be covered for the later years. And the chances of dipping into the emergency fund is also less. Of course, schemes for continuous renewal for life is a perfect situation. However, remember that the premiums are quite expensive in the later years.
Claim history: Opt for an insurer with a good claim history, as you will not want hassles at the time of filing a claim. This is a very important aspect and needs to be given due importance.
Entry age: Every policy has an entry age or the age till which one can buy the policy. Typically, it is capped at 65 years. Hence, this will determine if one is eligible to take a policy or not. Obviously, higher the age higher will be the premium and lower the coverage.
Exclusions: Some policies exclude pre-existing diseases for life. Some cover after a mandatory exclusion period of two-four years. Policies, which have the least amount of exclusion or lower exclusion periods, should be preferred.
Coverage amount: Some of the policies, especially meant for senior citizens limit the coverage to Rs 1.5 - 2 lakh. This would be a serious limitation given the medical costs today.
Network hospitals: Are the network hospitals in a nearby vicinity? It will help if there is an emergency. Also, if there is a co-payment system, check what will be the percentage you need to shell out.
Pre- and post-hospitalisation charge: Payments made towards expenses incurred on medicines, tests and so on, before and after hospitalisation, is covered by many policies. Also check the number of days that are covered. Some provide cover for 30 days pre-hospitalisation and up to 90 days later on.
Co-payment: In the case of senior citizens, some insurers impose a compulsory co-payment of 30 per cent for all claims and up to 50 per cent for pre-existing diseases, even after the mandatory waiting period.
Sub-limits: There could be sub-limits up on certain expenses. The more onerous the limitation, more restricted benefits the policyholder will get. For instance, some policies impose a sub-limit of one per cent of sum assured on the room rent. So even if one has a sufficient cover, some portion of the expenses may have to be borne by the insured.
Premium: Last, but not the least. While it is important to have a good policy for your parents to ensure your savings are not used up for medical costs, one has to look at the premium as well. Do proper research before buying cover.
The writer is a certified financial planner