Although most of us understand the need and relevance of a Health insurance policy in this century, we might still not have a clear understanding of how to plan the sum insured for our policy. One might argue that the sum insured in a health insurance plan should be chosen based on individual requirements, but many fail to give a roadmap of how to decide how much should be the minimum sum insured for those requirements. For example, the sum insured requirement for different life stages are not yet discussed openly in the industry for some or the other reason. It is true that one cannot accurately give the sum insured required for a person based on any factor, but at least one could give an estimate of the requirement. In this article we strive to provide the sum insured required at different life stages of a person. Furthermore, we also suggest ways to increase your health insurance sum insured. 

How Much Health Insurance Cover Is Needed at Different Life Stages?

Note:

1. All the numbers given in this table are for reference purpose only, these values should not be taken at their face value.
2.  The sum insured may be increased or decreased based on your health condition, financial stability and various other factors. 

1. First Job: The first thing to do after joining a job is to avail a personal or individual health insurance policy. This way you could prevent yourself from spending a huge amount in case of hospitalization. Do not think that your corporate group health insurance plan would be sufficient to take care of your health needs, as it could happen that sometimes the group health insurance could become insufficient due to various reasons. For instance, the sum insured in a group health insurance would not be of your choice, but your company’s. Another thing is that the coverage would be decided by your management and not you. For example, let us assume that your family has a history of any critical illness or lifestyle disease such as Cancer, Heart ailments, Diabetes, Hypertension etc. In such cases, your health insurance policy should be designed in such a way that it covers these illnesses adequately.

However, in most cases, a corporate health insurance plan would not be sufficient to even cover your basic hospitalization needs. It is important to remember that companies take sum insured based on your grade and seniority. So, as a newbie you would not be entitled to a higher sum insured which could be a disadvantage when you are hospitalized. 

2. In Late 20s or Before Marriage: The next life stage is in late 20s or before marriage. This is a crucial stage to take a health insurance policy as most of us would not have any pre-existing diseases in this stage. It is a high possibility that we might suffer from a lifestyle disease after we cross 30 years. In this stage, one should select a health insurance policy in such a way that it covers their long term health insurance needs. If you are still dependent on employer sponsored health insurance plans, then this period is the best time to take an individual health insurance plan. 

3. After Marriage: This is a life turning stage for any person. As you enter into marriage, you would be responsible to take care of your spouse as well. So the first thing you should be doing is to include your spouse in your employer sponsored health insurance policy. If your employer is not covering your family, then you should definitely take an individual health insurance plan and cover your spouse in it. If you had already taken a personal health insurance plan, then you should go for an endorsement to include your spouse in the policy. 

While including your spouse, you should check for the sufficiency of the sum insured as there are now two people covered in the policy. In addition, you should consider taking a super top-up health insurance policy for sum insureds ranging between Rs.80 Lakhs to 1 Crore. This would act as a blanket cover in case your basic sum insured is exhausted due to hospitalization. During this stage, you may consider taking riders such as Maternity cover and Newborn baby cover which would cover the next life stage events such as childbirth. 

4. After Child Birth: The next life stage is after childbirth. This is the stage you would be really expanding your family and with family expansion comes frequent visits to hospital. Newborn babies have less resistance power and there are high chances that they would fall sick now and then. Sometimes, admission to hospital for a certain number of days might also be required if the baby has developed symptoms of infection. In such cases, you would be needing a higher sum insured on your health insurance policy. 

This is the stage where you should be revising your sum insured. You may choose to go for mid-term revision of sum insured or revision at the time of renewal of the policy. We would recommend you to opt for add-one such as daily hospital cash, consumables cover etc. if they are not taken before. 

5. Inflation Adjustment at Least Every 5 Years: The most important thing people forget is the rising Medicare inflation in India. India is experiencing nearly 14% Y-O-Y inflation every year and this translates to increased hospitalization expenses every year. To accommodate inflation it is important that you consider it at the time of renewal of your health insurance policy. It is advisable to make sure to increase the sum insured every 2-3 years so that your sum insured is in line with the inflation. It might sometimes happen that there exists a considerable gap between 2 life stages during which you may not feel the need to increase the sum insured. However, keeping in mind the Medicare inflation in India, it is advisable to increase the sum insured every 2-3 years irrespective of the life stage modification of sum insured. 

6. After Retirement: The most important and crucial life stage is after retirement. After retirement you would not be eligible to avail employer sponsored health insurance. So, your only option would be to purchase an individual health insurance policy (in case you have not done the same before) or continue with your existing personal health insurance policy. You may either port your policy to senior citizen health insurance plans offered in the market based on your requirements or continue with the same policy by increasing the sum insured. This is the crucial stage where you should be having a super top-up health insurance policy in addition to the base personal health plan. 

How to Increase Health Insurance Cover:

We have understood how to select sum insured at different life stages and what should be the sum insured at those life stages. However, we need to discuss ways to increase your existing sum insured. 

1. With Internal Benefits: The first way to get an enhanced sum insured under the policy is to avail internal benefits offered by your health insurance plan. Health insurance plans provide additional sum insured as no claim bonus in case of no reported claims during the previous policy period. The no claim bonus sum insured may range from 5% to 100% of the basic sum insured. Higher the no claim bonus percentage, higher would be the bonus sum insured. In addition, most health insurance plans offer “restoration of sum insured” benefit in case of exhaustion of sum insured during the policy period. This means the insurance company would restore your sum insured to the base level so that it can either be used for related or unrelated illness. This way you could increase the available sum insured under the policy. This is the best way to get extra sum insured without paying any extra premium. 

2. Increasing Sum Insured in Existing Policy: The other way to increase the existing sum insured in your health insurance policy is to apply for base sum insured enhancement at the time of renewal of the policy. In this way, you would need to pay a certain extra amount and in some cases you may need to undergo a medical checkup before the sum insured enhancement is done. However, this way you could increase the sum insured as per your requirement. But, it is important to remember that any new sum insured would have a waiting period before which you can utilize it. 

3. Buy New Policy and Discontinue Existing Policy: The other option is to buy a new health insurance policy with the sum insured of your choice and then discontinue the old health insurance policy. Although this is not an ideal way, it should be done only when you feel your existing policy is redundant and is not offering you enough benefits and there is no option of portability. If you purchase a new health insurance policy and discontinue the existing one, it would lead to loss of all the accrued benefits till date. Therefore, one should be very careful before exercising this option. 

4. Super Top-Up: The best option an individual can have is to purchase a super top-up policy in addition to a base personal health insurance policy. A super top-up policy comes with high sum insured and low premiums. The low premium is due to the fact that super top-up plans have a high deductible. But as long as the deductible amount is less than the base sum insured, it is an excellent option to increase the health insurance sum insured. Super top-up would act as a backup option and would come into action when the base sum insured is exhausted. 

5. Self Cover+ Employer Sponsored Cover: The other option to increase the health insurance sum insured to avail employer sponsored health insurance plan in addition to personal health insurance plan. Employer sponsored health insurance would come with limited sum insured and the terms and conditions might also not be flexible. But, if your employer is offering you health insurance cover, then it would add to your overall health insurance cover, if you have a personal health insurance policy.

In any case we suggest you purchase a personal health insurance policy so that you would at least have a health insurance cover for a certain amount. For more details on the sum insured selection please talk to our health insurance experts at Ethika insurance. 

FAQs: 

1. Can I Have Two Health Insurance Plans?

Yes. You are permitted to have two health insurance policies in place. But, it would be efficient to have them as the options mentioned above instead of having two personal regular health insurance plans which do not serve your intended purpose. 

2. Can I Increase the Sum Insured Mid-term?

No. Sum insured revision (increase or decrease) is permitted only at the time of renewal of the policy. Mid-term increase of sum insured is permitted only if there is a midterm inclusion in the policy. For example, if you are married or childbirth happens then mid term sum insured enchantment is permitted. 

3. Which One Is a Better Option to Increase the Sum Insured?

The better option to increase a sum insured depends on your personal requirements. Please talk to our representatives for a plan that suits you better. 

4. What Is No Claim Bonus in Health Insurance?

No claim bonus is the incentive given by the insurance company to the insured customer for not making a claim in the previous policy period. No claim bonus in health insurance is offered in the form of increased sum insured. 

5. When Will the Restored Sum Insured Be Applicable?

The restored sum insured could be used only from the next claim during the policy period. For the current claim the restored sum insured would not be applicable.