HEALTH INSURANCE – MY FATHER’S WAY

In the race to excel in our professional lives and provide the best for our loved ones, we sometimes neglect our most important asset - our health. As days go by, with increasing levels of stress, decreasing physical activity and a deteriorating environment due to rapid urbanization, our vulnerability to diseases keeps on increasing at an alarming rate.

Evidently, as taught by my teachers in medical school, lifestyle diseases are set to rise to distressing levels in days to come. This results in increased expenditure and also contingent expenditures, being jolted by a financial shock when we least expect it. In many cases, people are forced to borrow money or sell family jewels, farmland and assets to cover their medical expenses and this is something which I have seen on so many occasions during my residency days in King George’s Medical College in Lucknow.

I know the opinion of a Plastic Surgery registrar regarding how disruptive sudden medical expenditures can be on the financial future of a family is no more than a bunch of not so happy patient anecdotes but when one looks at the WHO statistics that about 47% and 31% of hospital admissions in rural and urban India, respectively, were financed by loans and sale of assets, one is forced to understand the enormity of the problem. WHO says, 3.2% Indians will fall below the poverty line because of high medical bills. About 70% of Indians spend their entire income on healthcare and purchasing drugs. As a young registrar in 1988 this was an issue which bothered me all the time.

I was ready to strive to provide the best I can to my loved ones. Being from a reasonably well off family, not much was expected of me, but I felt it was my duty to take over the mantle of the provider from my father. Looking back today, I know I was being childish because all the while my father was around there was no confusion regarding who was most comfortable on that pedestal. Still I had the foresight to appreciate that unforeseen medical emergencies may not only stress our immediate cash flows, they would also adversely impact financial commitments towards regular savings thus impacting achievements of many of our long term financial goals. Add to it the burden of any loans that one may take to pay for medical expenses that might become too hot to handle!

So, I decided that I need a medical insurance for the family to ensure that no matter how critical the illness, it does not impair our financial independence. We were newly married and staying with my parents and so we started looking for all the available health insurance plans. It was pre internet era and so I had to drive from office to office to talk with the insurance guys and pick up the reading materials and flyers from their shelves. I soon appreciated that the cost of medical care was constantly increasing due to inflation and advancements in medical technology. At the same time the longevity was improving thus forcing us to consume more medical care. All this was reflected in the offers that we received.

It dawned upon us that the health insurance plans fell into three categories: commercial health insurance, which was provided by many different companies; private noncommercial health insurance, which was provided by Blue Cross and Blue Shield; and social insurance, which should be provided by the government and which was horribly anaemic in our country. So commercial health insurance was what we planned we should opt for. Armed with this knowledge and research I thought it was time I talked to my father.

When I returned from the hospital that evening I told my father that I had been enquiring about health insurance from various sources and it seems ICICI has the best offer Rs. 60,000 per annum for the full family with kids and dependent parents. My father, who retired as manager from Life Insurance Corporation of India, was pleasantly surprised with my newly found sagacity and said that we will talk about it at dinner.

So later when the family sat across the large dining table my father told everybody about our previous brief communication. “So you have decided to keep aside Rs. 60,000 every year for the health of your family. That is Rs. 5,000 every month. Good! It is nice to see that you are becoming responsible. But your family also includes your younger brother and sister. They are not included in your plan. You will have your children. It is silent about unborn children too. So this is not a good deal. Then again try to understand the concept of health insurance. You would feel cheated if you give Rs.60,000 and no one falls sick, and you will not like anyone to get sick. The company too will not like anyone to get sick and will try its level best to avoid paying you. So this business of health insurance is satisfying neither party. And you can take it from me, if anyone is satisfied at the end it will certainly not be the consumer."  Then how can I prepare myself for future health emergencies, I asked. "Future.........that is the catch word, future" my father repeated. "So tomorrow you will go and meet your bank manager. You will tell him that you want to open a recurring deposit of Rs.5,000 payable at monthly intervals automatically from your salary income. This will your health insurance. Your money stays yours all your life, you do not feel cheated if you don't fall sick and you are in charge of your health expenditure. You don't have to inform anyone about your ill health and can get treated by the doctors of your choice, in the hospital of your choice, in the room and bed of your choice. Whether in India or overseas your own money is the best insurance”

Needless to say, the next day this account was opened and till date we have never withdrawn from it. After keeping it a purely recurring deposit for 15 years we made just one change - increased our monthly contribution to Rs. 8,000 and directed the bank to pass on Rs. 5,000 every month as a systemic investment to a particular mutual fund of the Unit Trust of India. This has acted as an accelerator fund to take care of the still rising healthcare costs. We were instilled the fiscal discipline of not touching this fund for trips, holidays, fun and frolic but courtesy my father's advice, we have never paid a single paisa premium to any health insurance company. But there is a catch.........you have to start young and stay fit till around mid forty.

As a dear friend of mine very lucidly put it ‘health insurance is actually a philanthropic contribution to social welfare. We are paying for those who actually fall sick’. As such the companies have many catches in policy statements, all written in font size 8 which we fail to read and comprehend. One has to buy a rider for accidents, the most common cause of death, for cancer, which continues to rise in incidence as we live longer, and for other critical illnesses. Yes, health insurance is a must, but do you have to outsource it to some company or some alliance or do you choose to do it my father’s way......that is a decision you will have to take.