We are often advised by our parents to save money or to have a backup for emergencies. We are asked to invest in health insurance or life insurance policies and investments like fixed deposits, mutual funds, etc. But at a young age, things like binge-watching our favourite shows, doing work-outs at the gym, and other such things seem more important to us. They make us feel happy and fit. We follow the mantra of self-love and self-happiness.
It might sound bizarre to save a pension fund in the early twenties, and you might think it is unnecessary. But things like saving for a child's education fund and having a health insurance plan is important. It is the smartest approach you can have towards managing your finances. A health insurance policy has the power to keep your savings intact.
Buying a good health insurance policy
Health issues and emergencies may arise at any point in life, and they are not dependent on age and income. Again, we have a stressful work-life balance these days, which takes our health and daily life. Although medical facilities are progressing rapidly with the help of science, technology and money, it is still getting difficult to find a permanent solution to new diseases such as Covid-19.
But then, at a young age, we have a perception– "what is the need to buy a health insurance policy at this age? I am doing perfectly fine." Note that even youngsters can get impacted by critical illnesses at an early stage. Therefore, it is pivotal to have a health insurance policy early in life.
● Need to build a good claim history: The right time to purchase a health policy is when you are at the peak of your health and your internal and external body parts are in good shape. You have to pay less amount as a premium when you are young and healthy as the possibility of incurring a claim is less. You can take this as a blessing in disguise because it will help you shape a good claim history.
● No-Claim Bonus: You can get the advantage of a no-claim bonus when there are zero claims in a given year. If there is no claim in any year, one gets the benefit of a no-claim bonus (NCB). Usually, you can get additional coverage for every claim-free year without any extra cost. With time, the insured amount for coverage increases, and you get the benefit of having higher sum insured health cover consistently without stress alongside staying healthy.
● Critical Illness Insurance: Due to a sedentary lifestyle, even youngsters suffer from life-threatening diseases such as cancer, kidney failure, paralysis, etc. These extreme ailments can be covered under the Critical Illness Insurance Policy. The expense to treat such diseases is too high, including multiple hospital visits, admission, doctor visits, chemotherapy, etc., for a longer period. Usually, critical illness policy covers several costs associated with diagnosis and treatment, including hospitalization, chemotherapy, radiation, surgery, blood transfusion, nursing care, and the cost of prescribed medicines, among others. A critical illness cover pays the sum assured at once on being diagnosed with a severe ailment that counts as an acute illness, irrespective of the hospital charges. Hence, it is essential and always helpful to have a critical illness cover or rider to protect one's savings from being drained out in a medical emergency.
● Pre-existing coverage: If you buy a health insurance policy at a young age, you are taking care of waiting time-related to any previous diseases by default. But, there are only certain waiting periods that are covered for your pre-existing conditions. The period can range from one year to two years, and the previously existing ailments get insured mostly after four years. The advantage of buying a policy at an early stage of your life is that most existing diseases fall automatically under the insured sum as you age.
● Tax advantage: When you are young and have a source of income, it is beneficial for you to buy a health insurance plan. If you pay a premium, you will get tax benefits up to Rs 25,000 under the Income Tax Act, 1961. If your parents are dependent on you, the tax benefit can rise to Rs 50,000 on the health insurance plan bought in your parents' name.
As youngsters, we are not that efficient to keep our finances on track. Having a health insurance plan helps us to manage our finances and helps to keep our savings intact. Therefore, you should purchase a health insurance plan to safeguard long-term financial goals, enjoy lifetime access to quality health care, and live a healthier life.