Last Updated on October 8, 2023 at 1:45 pm
Every day, more and more people are waking up to a grim reality – their medical insurance costs are sky rocketing. In this post, I discuss practical and reliable ways to lower medical insurance costs with an important caveat – there is no free lunch (you need to give up some to get some).
Announcement: Travel to Europe at 40-50% lower air fares!!
Pranav Surya just posted in AIFW that “Oman Air + Lufthansa are running a fantastic promotion for cities to travel from Delhi”. If you want to avail such huge discounts, follow the steps pointed out in our new book: GameChanger (Rs. 199 hardcover; Rs. 99 Kindle). Additional tips are available in the Travel Training Kit (Rs. 199)
I just filed my ITR and realised that my annual medical insurance premium is 143% of my current monthly expense. This is going to get worse and worse. For the last ten years, I have had a United India Platinum policy for myself, wife and son (after he was born) and a United India Gold policy for my mother.
During this time, we have made three claims – for me, my wife and my mother. I was diagnosed with myasthenia gravis and my mother with Parkinson’s. This rules out portability as no insurer in their right mind will accept the associated risk or at the very least charge me more premium than United does (so that beats the purpose of porting!).
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
A super top-up or a top-up policy from United is possible, but I have still not considered it. Until 2015 I used to methodically increase the sum insured by the allowed 50,000 each for all members. Last year, such an increase shot up the cost a little too much so I settled for the same sum insured. When my premium is due in a couple of months, I am likely to be in for a rude shock.
Why do premiums increase?
1: Primarily due to the age of the insured as the risk for the insurer increases.
2: Since IRDA mandated that premiums should not increase due to a claim, insurers hiked the policy rates from day one. Now they are increasing it further stating increased no of claims and poor profits.
Before the IRDA ruling, only those who made a claim had to suffer. Now everyone insured has to suffer!
Excuse the irrelevance, but whenever I think of health insurance, this Vincent Van Gogh (1885-86) comes to mind.
What are my options if I wish to lower my health insurance costs?
1: Have no health insurance. What?! Are you serious?
That depends on how much money you can spare for an emergency fund. Suppose you can allocate 3 Lakh or 5 Lakh for a start (if you are in South India, twice as much in the North) for hospitalisations alone and can top it up each month by say 10,000, you can gamble on not having health insurance. Think about the perks – you will get discharged faster! On a serious note, if you can allocate that much money, you can afford the premium, can you not?!
2: How about portability? Trying to port a policy one because of cost alone is, to be frank, an unwise thing to do.
Many people calculate premiums online and assume that upon porting they will be charged the same! Ha ha! Wish it was that simple! Applying for portability is your right. Approving your application is the right of the (new) insurer. They can simply refuse or charge you much more as mentioned above.
Read more: Health Insurance Portability: What you need to know before porting.
I would strongly recommend against this. Do not jump from the frying pan into the fire.
Remember: You cannot port after you get the premium due notice that is, the bad news. A good 45-60 days before the due date is necessary to complete the porting (including rejection).
3: How about shifting to bank insurance policies? If something is cheap, then something is wrong with it. Even if feature-wise they are identical to the policies offered by the mother insurance company, the partnership can be dissolved at any time. Melvin Joseph posted at Facebook group, Asan Ideas for Wealth that National Insurance just terminated their bancassurance contract.
If you already have such a policy, then be prepared for the worst. If you have a normal health policy then stick to it.
4: Stick to your insurer, but talk to them – either via your agent or go in person (you know where you actually to another human being and not to a device).
Request them to offer you a modified policy (with waiting period benefits retained!):
(a) a floater policy if you hold an individual policy (I do, but will not opt for this as 2/4 in my family are not exactly in the pink of their health)
(b) A policy with copay or co-insurance. That is, you agree to pay 10% or 20% or 30% of the hospitalisation costs (it can also be a fixed sum instead of a percentage) and the insurer will pay the rest. This is usually available for senior citizens, but you can ask them to consider this for younger people too. Sure this means you have to spend in case of a hospitalisation, but hey there is no free lunch. You want to lower costs reliably then be prepared for a haircut.
(c) You can try to add a deductible clause in the policy. That is, you agree to cover the first 1L/2L/3L and then the insurer will cover the rest (like a top-up policy)
(c) Speaking of which, you can opt for a top up or super top policy alone with a low deductible. You are then gambling on a lower frequency of hospitalisation than premium payment(!).
Note: I am not saying such modifications are a given. But if you state your intentions to be a loyal customer and are willing to give up a thing or two or three, they might accept. We will know only when we try. This is where a proper letter of intent, followed by a personal visit will help. Not all intermediaries are likely to be competent enough to get this done for you. If you think so, then you can use their services. Would be they be willing, is another matter!
What is the worst that can happen if you make such a request? Would they say the new policy would be treated as “new” with waiting periods reset? Then if cutting costs is important to you, I say take that chance. I repeat – no free lunch.
In any case, build a large emergency fund. Ignore bullshit thumb rules like “six months expenses worth”. Only those who have never faced an emergency, especially a hospitalisation, will take such thumb rules seriously.
Please let me know if there are any other reasonable and reliable options to lower premium costs.
__________________________________
Announcement: Venkatesh Jambulingam has been kind enough to translate few of my posts in Tamil. Please support his work by sharing it. Latest posts:
How to review a mutual fund portfolio (Tamil) (English version is here)
Minimalist portfolio ideas for young earners (Tamil) (English version is here)
Ask Questions with this form
And I will respond to them on Monday. I welcome tough questions. Please do not ask for investment advice. Before asking, please search the site if the issue has already been discussed. Thank you. PLEASE DO NOT POST COMMENTS WITH THIS FORM it is for questions only.
[contact-form][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Comment’ type=’textarea’ required=’1’/][/contact-form]
GameChanger– Forget Startups, Join Corporate & Live The Rich Life You want
My second book, Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want, co-authored with Pranav Surya is now available at Amazon as paperback (₹ 199) and Kindle (free in unlimited or ₹ 99 – you could read with their free app on PC/tablet/mobile, no kindle necessary).
It is a book that tells you how to travel anywhere on a budget and specific investment advice for young earners.
The ultimate guide to travel by Pranav Surya is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)
You can Be Rich Too with Goal-Based Investing
My first book with PV Subramanyam helps you ask the risk questions about money, seek simple solutions and find your own personalised answers with nine online calculator modules.
The book is available at:
Amazon Hardcover Rs. 271. 32% OFF
Infibeam Now just Rs. 270 32% OFF. If you use a mobikwik wallet, and purchase via infibeam, you can get up to 100% cashback!!
Flipkart Rs. 279. 30% off
Kindle at Amazon.in (Rs.271) Read with free app
Google PlayRs. 271 Read on your PC/Tablet/Mobile
Now in Hindi!
Order the Hindi version via this link
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)