Why Is Medical Insurance Important for Low and Middle-Income Groups?

Healthcare is an essential requirement in today’s day and age. Gone are the times when health insurance was a luxury. Instead, now, it is a necessity. The soaring cost of healthcare due to climbing medical inflation makes it difficult to pay for medical treatments from your savings. At such times, a health insurance policy, also known as medical insurance, comes in handy to safeguard your finances, as well as to ensure the availability of quality and standardized treatment facilities. The rising treatment costs are especially hard for low and middle-income groups, and medical insurance is a way to ensure a financial safeguard for these emergency medical situations. In the October 2021 report of NITI Aayog titled ‘Health Insurance for India’s Missing Middle’, statistics suggest that nearly 30% of India’s population is devoid of health insurance coverage ^[1]. These numbers could be higher due to the gaps and the overlap in the existing government schemes. This low insurance penetration is concerning when it comes to the low and middle-income groups. Let’s understand how the low and middle-income groups can gain benefits by taking the help of health insurance plans that are available.

1. Aid for combating soaring medical inflation

The medical inflation data available in the public domain indicates that the average rate of rise in medical costs is between 12% to 14% every year in India. With these levels of inflation, it becomes increasingly difficult to accumulate savings in proportion to the rise in medical treatment costs. Thus, health insurance plans come in handy where you only pay a specified amount of premium for insurance coverage. This, especially for low and middle-income groups is beneficial since they cannot set aside a large corpus to meet the medical expenses that may arise. Instead, a steady premium, be it monthly or annually, is a systematic approach that can contribute in the long term towards the protection of their health.

2. Protecting hard-earned savings

Any serious ailments, whether it is a day-care procedure or an elaborate operation, require you to spend thousands of rupees. For a serious ailment, this amount may even run into lakhs. Thus, a health insurance policy helps safeguard your finances by compensating for the treatment expenses. In such a case, the out-of-pocket expenses are at a low level, helping you save for retirement and not spend the amount saved on medical expenses. *

 3. Access to quality healthcare facilities

Quality treatment is essential to ensure that the medical condition is addressed with due care. For middle and low-income groups, limited financial resources may limit their ability to seek standardised quality healthcare facilities. With a health insurance policy acting as their safety net, they need not worry about the treatment cost and not compromise on the quality of treatment. *

 4. Coverage for hospitalization costs

Health insurance plans for family or self, both, provide coverage for the various treatment facilities. Hospitalization expenses that are a major part of the treatment are covered in the majority of the health insurance policy unless specifically excluded. *

 5. Pre-hospitalisation and post-hospitalisation cover

It is not always about when the treatment costs end after a discharge from the medical facility. Several ailments require periodic testing before and after the treatment. A policy that covers these forms of pre-hospitalization and post-hospitalization provides comprehensive coverage, where you, the policyholder, need not worry about the expenses (such as diagnostic tests, investigative procedures, medication, and more) before and after the actual treatment. *

 6. Facility for cashless treatment

Another benefit, especially for low-income groups, is the cashless facility available in health insurance policies. With this feature, you can avail of treatment without having to pay the entire treatment cost upfront. Instead, you can avail of treatment at a network hospital, where only the deductibles are required to be paid and the balance amount is settled by the insurance company with the hospital, subject to your policy’s terms and conditions. *

 7. Protection for the entire family in a single policy

Low and middle-income groups are often in a financial position where they cannot afford individual policies for each member of their family. Instead, with family floater policies, single insurance coverage is available for all members at once. Here the premium amount is also lower when compared to the aggregate of individual policies, along with a larger sum assured. *

 8. Option to refine coverage via add-ons

Alongside the above benefits, health insurance policies can also be customized using add-ons to fit an individual or their family’s requirements. Thus, add-ons are optional covers that help enhance the overall policy’s scope. When selecting add-ons, make sure to use a health insurance premium calculator as it impacts the overall policy’s premium. *

9. Avail tax benefits

Lastly, health insurance policies, along with offering financial coverage, also offer tax benefits. Section 80D of the Income Tax Act allows for a deduction from the gross total income, helping lower the overall net total income on which the tax is to be computed. These tax benefits are subject to change in prevalent tax laws. *Standard T&C Apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.