Health insurance vs. Medical corpus: What's your choice?

New Delhi: Health insurance is often a necessity for everyone. It is especially in times of medical emergencies when it can provide significant financial relief. However, despite its perceived advantages, a considerable number of individuals remain skeptical about opting for health insurance policies and instead prefer to build their own medical funds.

Creating personal medical corpus a more prudent choice?

Let’s address the drawbacks associated with health insurance. Many individuals refrain from purchasing health insurance. The primary reason is due to the escalating premiums. One of the many surveys by LocalCircles shows such results. According to it, more than half of policyholders have experienced a premium increase of over 25% in the past year alone. This unpredictability in premiums can catch policyholders off guard. Even those who have been loyal customers for years.

Insurance providers attribute these premium hikes to rising claim rates within specific age groups. This often leads to complications during claim settlements or even outright rejection. The survey also reveals data from over the past three years. In which 43% of policyholders encountered difficulties while processing their claims. Such challenges may compel individuals towards the feasibility of a personal medical corpus instead of insurance policies.

When it comes to establishing a medical corpus, some individuals opt to create their own emergency funds. This step is taken to cover substantial medical expenses. They often supplement this corpus annually. This can be particularly beneficial for elderly individuals or those facing prohibitively high premiums due to pre-existing health conditions. For those mindful of their health, investing in Systematic Investment Plans (SIPs) serves as an alternative to traditional health insurance policies.

Is it good for everyone?

This approach may not be suitable for everyone. Balvant Jain, a tax and investment expert, advises that choosing to build a medical corpus may be more appropriate for elderly individuals or those burdened by unaffordable premiums. Common health conditions such as hypertension or diabetes can further complicate matters, making it challenging to secure coverage from insurance providers or leading to exorbitant premium quotes. In such scenarios, the option of building a personal medical corpus could potentially offer more control and financial security.

Despite these considerations, it is undeniable that health insurance policies offer unmatched benefits. Policyholders can benefit from substantial coverage. If they do not file claims in a given year, they may even receive a no-claim bonus. These advantages are not typically associated with personal medical funds. Additionally, younger individuals often enjoy lower health insurance premiums, making it a more affordable option for them.

While creating a personal medical corpus may appeal to those with sufficient retirement savings and financial stability, it may not be a practical choice for everyone. Therefore, experts advise individuals to carefully evaluate their circumstances and priorities before deciding. Generally, experts recommend opting for health insurance policies at a younger age, while those in a strong financial position post-retirement may consider exploring the option of building a medical corpus. By weighing these factors thoughtfully, individuals can make informed choices that align with their healthcare and financial needs.