Reasons To Consider Health Insurance A Part Of Financial Planning

Financial planning is a complex topic that requires a deep understanding of one's financial goals and future plans. When we sit down with a pen and paper to plan our finances, it can seem overwhelming. However, we cannot ignore the importance of financial planning or postpone it for another day. A robust financial plan provides stability and promises a secure future. While there are many aspects and investments to consider when planning finances, one investment that is often overlooked or underestimated is health insurance. If you take a closer look, you will realize that health insurance is a cornerstone of your financial planning.

Here we cite 8 reasons why health insurance should be an integral component of your financial planning strategy.

1. Protection Against Medical Expenses: One of the main reasons to purchase a health insurance policy is to protect your savings from unexpected medical emergencies. Health issues can arise at any time and without warning, leaving you with hefty medical bills to manage. In such scenarios, health insurance serves as a financial safety net, covering expenses related to hospitalization, surgeries, medications, and other medical procedures.

With the advancement in medical science, the cost of surgeries and procedures has increased significantly. For instance, in India, bypass surgery can cost anywhere between 1.5 lakhs to 5 lakhs. Without health insurance, this could lead to financial stress and debts. By having a comprehensive family health insurance plan, you can mitigate the risk of depleting your savings or falling into debt due to unforeseen medical events.

2. Benefits Beyond Medical Coverage: Many health insurance plans offer more than just coverage for expenses that arise due to illnesses or accidents. These plans also provide preventive care services and wellness benefits that can include routine check-ups, vaccinations, screenings, and access to wellness programs. Taking advantage of these benefits can be very advantageous in many ways. For instance, a preventive care service can help you understand your health status and identify areas that need attention, such as nutritional deficiencies or impending health issues. These services can safeguard your health and also help detect and manage potential health issues early, which can reduce your long-term medical costs.

3. Protection for Your Loved Ones: When you buy a family health insurance or family floater policy, the policy coverage extends to all the members included in it. In case of a medical emergency, having sufficient health insurance coverage ensures that you are not burdened with high medical bills or required to compromise on your medical needs. It provides you with peace of mind, and guarantees the right medical attention for your loved ones without jeopardizing your financial goals.

4. Mitigating the Impact of Inflation: The cost of healthcare has been increasing steadily, and inflation has only made matters worse. So, it can be difficult to manage medical expenses during emergencies if you don't have adequate health insurance. Health insurance provides coverage for medical services at present prices, thus helping you mitigate the impact of inflation and protecting you from the full impact of future healthcare cost increases.

5. Availing Tax Benefits: In India, individuals can avail of tax benefits on health insurance premiums paid. As per Section 80D of the Income Tax Act, you can claim a maximum annual deduction of INR 25,000 or INR 50,000 (for senior citizens) on the premiums paid towards your health insurance policy. Proper planning can also help you claim deductions of up to INR 1 lakh on health insurance premiums paid for self, family and or dependent parents. The following table will help you understand this better:

Therefore, if you pay health insurance premiums for your parents, you can claim additional tax deductions and save more.

6. Preserving Your Savings: Unanticipated medical expenses can rapidly deplete one's retirement savings and disrupt their retirement plans. Health insurance serves as a barrier, enabling individuals to safeguard their retirement savings and relish their golden years without the constant worry of financial uncertainty caused by healthcare expenses.

7. Access to Quality Healthcare Services: Having health insurance coverage provides individuals with access to a network of healthcare providers and facilities. This ensures that they can receive timely and high-quality medical care whenever needed. The ability to access a wider range of healthcare services not only improves overall health outcomes but also offers peace of mind, knowing that medical attention can be sought without financial constraints.

8. Peace of Mind and Reduced Stress: The fear of unexpected medical expenses can lead to financial worries that can severely impact one's mental health. However, having health insurance can provide a sense of security, knowing that you are financially protected when faced with health challenges. This alleviation of financial stress allows individuals to focus on their health and well-being, ultimately resulting in a better quality of life overall.

The Take Home Message

Health insurance plays a crucial role in financial planning as it provides protection against medical expenses, promotes preventive care, ensures financial security for loved ones, mitigates the impact of inflation, offers tax benefits, preserves retirement savings, grants access to quality healthcare services, and fosters peace of mind. By incorporating health insurance into your financial strategy, you not only safeguard your finances but also invest in your long-term health and well-being.