Health Insurance sum assured should increase every 2 years – It is a sensible decision

Many a times our customers or clients ask us what should be the sum assured under Health Insurance policy? Should I increase the sum assured this time?

The logic demands that sum assured or Health insurance policy should be fulfilling the following criterion:
    (a)  Cover the risk to a reasonable extent – need not be highest
    (b)  Should be Cost effective – where pocket permits

While in the case of motor vehicle sum assured (IDV) – goes down year after year due to depreciation / obsolescence of the vehicle, the situation changes for Health Insurance as t with increase in age of the insured the risk also increases and all of us (including Health Insurance provider )  know that it goes on increasing with passage of time .

The reasons are

As you grow older the need for hospitalization definitely increases as some diseases are age related and are bound to affect most of us and some examples are:
(i)        Hernia
(ii)      Cataract
(iii)    Prostrate
(iv)     Hysterectomy
(v)      Arthritis (Knee replacement)
(vi)    Many others Critical Illness like Cardiac / Cancer

 

We find that on the one hand need is increasing and at the same time up gradation of Medical Technology ( Equipment /diagnostic) results in availability of better treatment / painless treatment to the patient .Some of  examples of  up gradation of Medical Technology are :
(i)      Lasic Surgery ( day surgery ) vs. Traditional Cataract Surgery (3 days stay  in hospital )
(ii)     Advanced MRI  vs. MRI vs. CAT vs. X-RAY Digital vs. X-RAY
(iii)    Even  in Coronary Stent In plants you have choice of

Traditional Metallic Stents      Rs.40000
Drug eluting Stent                   Rs.150000 (higher by 275%)
Bio Degradable Stent              Rs.300000 (higher by 650%)

It is natural that Bio Degradable Stent will be better / more effective than Traditional Metallic Stents.   In Times of India – Oct 07, 2013. We came across good information from Mr. Sanjay Datta (ICICI Lombard).

 “Treatment costs have gone up by 50-60% in some cases such as arthritis and brain stroke. Several other ailments such as spinal cord disorders, heart stroke, and hip and thigh fracture have witnessed an increase of 25 to 50% in treatment costs”.

In the same context we have comment of Mr. Suresh Sugathan, Head of Health Insurance at Bajaj Allianz General Insurance.

“The costs of robotic surgery on average are 25-35% higher than conventional surgery. What typically happens is that the doctor offers the patient a choice between a traditional option and a superior technique”.

In Ria Insurance Brokers we have the experience of dealing with thousands of families and according to Mr. S K Sethi Director the finding is “When the patient / insured checks with many friends / colleagues / relatives every one will suggest – go for latest, go for best. This is the time one realizes the value of higher sum assured policy “

We in www.healthinsuranceindia.org and Ria Insurance Brokers Pvt. Ltd.  feel that we should always go in for use of modem advancement achieved in Health Care Technology / use of modem equipment as well as medicines.

We believe – “Even if the hospital is trying to use the newly installed expensive equipment extensively with a new to recover the cost – we should not bother. We always suggest / advise that sum assured should be reviewed every 2 years and increase it by 25% - addition to same policy or taking a new policy.

What ever may be the reason seeing the inflation in Health Care at 20% year after year it may be worth while for you to reconsider sum assured which you are have. If you bought the policy in 2005 for Rs. 2 lakhs then your sum assured in 2013 should be Rs.10.32 lakhs, say Rs.10 lakhs

Year	Rs.(in lakhs)	Increase 10%	Increase 20%
2005	2	2.2	2.4
2006		2.42	2.88
2007		2.66	3.46
2008		2.93	4.15
2009		3.22	4.98
2010		3.54	5.97
2011		3.90	7.17
2012		4.29	8.60
2013		4.72	10.32
2014		5.19	12.38
2015		5.71	14.86
2016		6.28	17.83
2017		6.90	21.40
2018		7.59	25.68
2019		8.35	30.81
2020		9.19	36.98

If you are continuing at Rs.2 lakhs + Rs.50000 or so of NCB – you are lagging behind and will have to shell out lot of money your own pocket or go for use of old technology /medication .when the need arises.