Have you gotten your first paycheck? It’s time to purchase health insurance

Prakriti Verma, 23, began investing in mutual funds through the systematic investment plan (SIP) route shortly after landing her first job, as many financially savvy young people do.

However, the Delhi-based digital marketing professional does not place the same value on health insurance. “I am covered under my employer’s group insurance policy as well as the family floater policy purchased by my father,” Verma says.

As with Verma, 23-year-old research analyst Ashutosh Bhardwaj has not purchased health insurance. He intends to purchase one but is unsure whether he requires one.

Health insurance is not just for the elderly
Many people in their early twenties feel the same way, but the truth is that health emergencies can strike without warning.

Nonetheless, only a small percentage of Indians purchase health insurance policies in their early twenties. Most of them realise the value of health insurance coverage when they are in their 30s or 40s, or even closer to retirement.

Financial advisors recommend purchasing a health insurance policy early in one’s career for a variety of reasons. For one thing, younger people are less likely to suffer from chronic, lifestyle diseases like diabetes and hypertension.

This is why many health insurance policies do not require younger people to undergo health screenings prior to purchasing a policy. Naturally, premiums are lower for those age groups as well.

Furthermore, a health insurance policy covers accidents and illnesses such as infectious diseases and appendicitis that are not age-related.

“Diseases no longer seem to be age-specific.” Furthermore, diseases such as dengue or typhoid can affect anyone,” says Kapil Mehta, Founder, SecureNow Insurance Broker Ltd.

The COVID-19 outbreak has increased public awareness of the importance of having a health insurance policy in place. To begin, those in their twenties can begin with a cover of at least Rs 5 lakh and review it every five years.

Motor and cyber protection are also essential.
If you own a motor vehicle, such as a car or a motorcycle, you must purchase motor insurance. While third-party liability insurance is required by law, you should also purchase ‘own damage policies’ to protect your vehicle from damage.

Cyber security insurance is another policy that has grown in popularity recently. With the increasing digitisation of most tasks and the increased use of social media, protecting yourself against any threats to your identity has become a must.

“It is especially important for children and the elderly to have cyber insurance,” says Mehta. A cyber insurance policy with a sum insured of Rs 25,000 should cost no more than Rs 200-300, he adds.

If you do not have dependents, you should not rush to purchase a pure-protection term-life insurance policy. In essence, such pure risk insurance is intended to financially secure family members’ futures in the event of the policyholder’s death. So, if your family does not rely on your income, the decision can be postponed.

Employers’ group coverage is insufficient.
Pollution and lifestyle issues like lack of physical activity, long working hours, and junk food have increased the likelihood of contracting lifestyle ailments.

With rising healthcare costs, employers’ health coverage – typically Rs 3-5 lakh – may fall short in times of need.

More importantly, it will vanish once you change jobs. 

If you become ill or are involved in an accident while between jobs, you must pay for your own medical treatment.

As a result, in addition to the coverage provided by your employer, it is prudent to purchase your own health insurance policy.

Advantages of Purchasing Health Insurance Early
Most health insurance policies impose a waiting period for pre-existing conditions. You cannot make any claims during this time, even if you have a medical emergency. Thus, purchasing a policy in your twenties is a wise decision because most illnesses manifest themselves later in life, by which time you would have exhausted your waiting period.

As a result, as you get older, you’ll have access to a larger policy without having to pay a premium for it.
“One should consider purchasing long-term policies of three years in order to obtain more premium discounts,” says Gurdeep Singh Batra, National Head, Non Motor Underwriting, Bajaj Allianz General Insurance.

When you purchase a health insurance policy in your twenties, you have more time to pay the premiums, making the premium rate more affordable. In your 30s and 40s, you would pay a significantly higher premium for the same coverage.

There is no trace of pre-existing illnesses.
When you have a medical condition, it is difficult to obtain adequate insurance coverage. When you buy a health insurance policy in your twenties, any illness diagnosed after the purchase is automatically covered by the policy.

When you are healthier, you will also be able to negotiate the best health insurance policy without facing rejections or pre-conditions from the insurer.

There is no pre-policy health screening.
Companies typically require pre-policy health check-ups if you choose a health insurance plan after the age of 45. Companies charge a higher premium if the reports are not encouraging. However, if you purchase a policy when you are younger, you may not even need to have any pre-medical exams.

Tax advantages Section 80D of the Income-Tax Act of 1961 allows you to claim a tax deduction of up to Rs 25,000 on premiums paid for health insurance policies. “If someone falls into the 30% tax bracket and pays an annual premium of, say, Rs 10,000 for a health insurance policy, the effective premium outgo for that person is only around Rs 7,000,” says Siddharth Singhal, Business Head, Health Insurance, Policybazaar.com.