How Much Health Insurance Coverage Do You Ideally Need?


The need for health insurance is visible now that there are so many new diseases emerging every single day. When you buy medical insurance, you expect your policy to cover you in case of any health-related emergencies. If you purchase a policy but later find out that the coverage wasn’t sufficient enough to cover your illness, you will be disappointed and your investment will not be worthwhile.

How does one know if their health plan is sufficient or they are underinsured?

You may think that the insurance cover you’ve purchased is sufficient for you, but chances are that you’re still underinsured. This happens majorly due to lack of awareness, and misinformation. It is common to assume that you have enough insurance until a need arises and you file a claim only to find out that it is rejected, as the coverage does not extend to cover your requirement. You then need to spend money from your own pocket. It is as good as having no insurance policy at all.

If you face a lack of insurance protection under any of the types of health insurance covers you already have, you’re underinsured. Here are the two types of situations you might find yourself in:

  1. Insufficient Coverage

There can be two possibilities under this category as well. Either your insurance provider did not offer you sufficient coverage, or they don’t provide the coverage that you might require in the future.

For example, you select a comprehensive health insurance plan that offers you coverage of say Rs. 30 lakhs for treating the medical emergency you’re suffering from. You might simply assume that with this huge of an amount, it is possible to cover any disease. But what if the policy you’ve chosen doesn’t provide coverage for a critical illness that you have. You missed out on this information because you weren’t aware or did not peruse the policy wordings before purchasing the health insurance. Now that you’ve contracted a critical illness, what good will the sum assured be?

  1. Sum insured is less

This is the part when you have sufficient coverage, but you went for a lower sum insured because you predicted something else for the future, or you just wanted to pay low premiums. One huge problem with the low amount of sum insured is that you don’t get enough money at the time of urgency.

Let’s say you purchase health insurance coverage and your sum insured is Rs. 3 lakhs. At present, you feel that this particular sum amount will be sufficient for you even in the future, and all your health-related needs will be taken care of under this. Here’s where you forget about inflation. Maybe after a few years, the same 3 lakhs won’t mean anything and its value will fall. More importantly, when you will need the amount, it won’t be enough to support you financially and you might have to spend from your savings, defeating the entire purpose of buying health insurance.

Another example of staying underinsured is if you are buying a basic individual health insurance plan for the elderly when you must purchase health insurance for senior citizens, which will cater to all their needs.

To completely avoid the risks of staying underinsured, you must go for an adequate sum insured, keeping your needs in mind. It might require you to pay a high premium, but it saves you from facing financial burdens later in life. Most importantly, don’t wait for surprises and read the policy’s terms and conditions, along with the inclusions and exclusions, so while filing a claim you know what’s covered and what’s not. Know how much coverage you will need and choose accordingly.