Health insurance: A new idea for the old

health insurance

We often hear our elders speak about ‘saving for the rainy day’. Financial planners often highlight the importance of an emergency fund. It is not without reason.

A friend recently admitted his dependent mother to the hospital. She is 75 and has no health insurance. It is the third instance of hospitalisation within four months. While he never complained about the money he had to spend, one could sense the unease. He is lucky though. His mother does not have a condition that requires an invasive procedure or expensive therapy.

However, take a look at this data. By 2050, India is expected to have 34 crore seniors over the age of 60. The average cost of hospitalisation has increased by 10.4 per cent each year in 10 years to 2014, according to one India Home Healthcare Services report.

Yes, there are health insurance companies that offer a comprehensive cover for you and your family. There are family floater plans, and there are group insurance schemes. There are a few government-backed schemes run by public sector insurers for the elderly. However, in most policies, you have to pay a very high premium each year.

You assume that when you get old, someone will look after you. Most people rely on children for any form of insurance in India, according to a detailed survey of the RBI’s Household Finance Committee 2017.

However, picture this. A hospitalisation for a senior citizen with diabetes for a urinary tract infection costs Rs 1,50,000 for a week-long hospital stay. That is a common occurrence and does not require any invasive procedure. It involves management of the patient’s health by administering antibiotics through injections.

If you can afford to pay for this, you can go to a private nursing home or a hospital every time this happens. The other option is to take the patient to a government hospital.

What can you do
Healthcare for the elderly is fuzzy. Insurance is even more complicated and confusing. There are exclusions and limitations in practically every health insurance policy for senior citizens. Unless you have your company paying for expenses incurred, you have to dip into your or your parents’ savings. You must take an available insurance policy if your parent is over 60.

In addition to that, it may be a good idea to start a systematic investment plan in mutual funds.

If you have just started working, you may want to start setting aside Rs 1,000 every month for your parents. That is the least you can do for people who gifted life to you. Currently, your parents may not need your help. However, having that extra money around will do much good to you and your family. A difficult health situation may arrive without any warning. While your insurance may take care of the initial expenses, no money is enough if the health condition requires constant medical attention or therapy.

If you are middle-aged and have parents who are well over 60, they may initially support their healthcare. However, there will be a time sooner than later when you may have to support them if their condition is a chronic one. If you have been saving money for this moment, imagine how easy it would be for you to help them when they need your help the most. If you have not, you may want to start doing that right now.

Where to invest 

To support the health of your elderly parents, you could put the money mostly in assets that are easy to invest and exit. If you are young, you could opt for an SIP in an open-ended index mutual fund or a balanced fund. If you think that is risky, you may want to keep it in a fixed deposit. It is in addition to your emergency fund where you keep aside about 4-6 months of your income.

What if you have to deal with a hospital situation with your parent and you lose your job at the same time? That could be a double whammy. In such a case, your designated fund for your elderly parents may save the day for you.


Author: Loki