Rising inflation tends to impact our daily lives, with prices of commodities and services going up. Health insurance policies are no exception—they are becoming pricier whether you are a first-time buyer or are looking for renewal.
This is because the cost of medical treatment, equipment and medicines is increasing at a far greater rate than other commodities and services.
“It is natural that with age, insurance premiums would get costly. But due to rising inflation, the impact is more severe. It is not just normal inflation (CPI) that counts, but also the medical inflation that affects the existing and new premium rates. Medical inflation is calculated based on various factors such as rising cost of hospitalisation, the number of qualified doctors and nurses, technological advancement in the medical field, and more,” says Anup Bansal, chief business officer, Scripbox, a wealth management firm.
According to a recent research report by Motilal Oswal, India saw the highest medical inflation rate in 2021 of 14 per cent, followed by China (12 per cent), Indonesia (10 per cent), and the Philippines (nine per cent). This, in addition to a higher claim ratio due to Covid-19, has resulted in premium prices increasing by approximately 10-20 per cent in recent months.
“Getting health insurance after the pandemic has become crucial to safeguard financial interests against uncertainties and expensive medical and hospitalisation bills. However, inflationary pressure has made it more expensive for common people to buy or renew their health insurance plans. This is especially true if you are above 50-55 years and/or have existing health issues,” says Bansal.
Expenses go up as you age. When you are single, typically, you are obliged to provide just for yourself and sometimes your parents. As you grow older and have children, family expenses get added to the budget. Similarly, home and other loans can burden your purchasing capacity.
As expenses increase, you might find it difficult to pay for medical expenses out of your pocket. Health insurance can come handy then.
Also, buying an insurance policy early on can help you get it at a cheaper rate. Besides, over the years, no-claim bonus and other benefits can get accumulated.
When inflation increases, your purchasing power decreases. If you had bought a policy 10 years ago, it might not be adequate to cover the needs of your family now. Similarly, what seems adequate now, may not be relevant 20-25 years down the line as the purchasing power of money decreases.
Hence, while deciding how much sum insured would be adequate, you must factor in inflation.
Your health insurance cover should be based on the estimated costs that you are likely to incur over the years.
