What is Health Insurance and why you should have one?

People are ignorant when it comes to health. However, due to awareness and technology this picture is changing as more and more people are moving towards a healthy life. However, health insurance is one of the things which people still are not actively carrying it. As per the latest available NFHS (National Family Health Survey) report, Health insurance coverage in India is far from satisfactory. Less than one-third (29 per cent) of the households have at least one usual member covered under health insurance or health scheme. Only 20 per cent of women aged 15-49 and 23 per cent of men aged 15-49 are covered by health insurance or a health scheme. Half of those with insurance are covered by a state health insurance scheme and more than one-third are covered by RSBY (Rashtriya Swasthya Bima Yojana). Four per cent of women and 3-5 per cent of men are covered by the Employee State Insurance Scheme (ESIS) or the Central Government Health Scheme (CGHS). Though the picture has changed from the previous NFHS report where the percentage of households in which at least one usual member is covered by health insurance or a health scheme increased from 5 per cent to 29 per cent in the 10 years.
 
So from the above information, we can understand that though the awareness of health insurance is increasing, we are still far away from a satisfactory number. Why is it so, why should you have health insurance? Health insurance is a type of insurance which covers your hospitalization cost. So this provides you funds known as sum assured if a calm arises. Remember, the sum assured is paid on an expense basis and not as a lumpsum as in case of life insurance policies. If you have health insurance of two companies then the claim is settled proportionately.

Let us understand this through an example, say you took health insurance policy with sum assured of Rs. 5 lakh each from insurance company A and B and you had an expense of Rs. 3 lakh. Then you won’t get 3 lakhs from each company. Either you will get complete Rs. 3 lakh from A or B or you may get Rs. 1.5 lakh each from A and B.
 
The number one reason why you see need health insurance is, when you look around healthcare facilities are developing at a fast pace and so are the cost of getting access to such a facility. In case you encounter a medical emergency your finances must not come at stake. Let us assume that you had started a SIP (Systematic Investment Plan) of Rs. 10,000 per month for your child’s education and the same amount have grown to say Rs. 2 lakh. Now assume some medical emergency is detected and you need to undergo an operation and the cost of the same is Rs. 3 lakh. So in the absence of health insurance, the obvious way to fund this operation is to redeem the savings set aside for your child’s education and for the remaining Rs. 1 lakh you would either need to take a personal loan or exhaust your savings. You can avoid all this fuss if you have health insurance. People usually think of the small premium that they pay and ignore the fact that this small premium may help them secure their big savings.