Advantages and Disadvantages of Buying a Health Insurance Policy

In India, healthcare is getting expensive with each passing day. You can easily exhaust all your savings in case you get hospitalized or are diagnosed with a critical illness. Health insurance is the only way to protect your savings during a medical emergency and therefore, buying medical insurance is a must. Know about the various advantages and disadvantages of buying health insurance.

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    Advantages of Health Insurance

    Take a look at some of the major advantages of buying a health insurance policy:

    Financial Coverage

    One of the biggest advantages of health insurance is that it provides financial coverage to the insured for medical expenses incurred on a planned or emergency hospitalization. This means that your insurance company will pay your hospital bills if you have a health policy. It also covers the cost of availing treatment for a disease or medical condition.

    Thus, health insurance ensures that you do not have to compromise on the quality of treatment and can obtain it at the time of need without worrying about arranging money.

    Protects Your Savings

    A major benefit of medical insurance is that it safeguards your hard-earned savings even if you face a medical emergency. You would never want to exhaust your life’s savings on paying medical bills. A health policy ensures that your insurance company pays off your medical bills and your savings remain intact.

    Cashless Hospitalization Facility

    Another major advantage of buying health insurance is that it comes with cashless hospitalization facilities. Under this facility, the insured does not have to pay the hospital bill at the time of discharge. Instead, the bill amount is directly paid by the insurance company to the hospital.

    However, this facility is only available at a network hospital of the insurance company. Thus, you need to get hospitalized at a network hospital to avail cashless hospitalization facility.

    Free Health Check-ups

    Most health insurance plans offer the benefit of free health check-ups. Under this benefit, the insured becomes eligible to get his/her preventive health check-up done free of cost. While some plans offer this facility every year, others may offer it after a block of a few years. Moreover, you may be eligible for free health check-up under a policy only if you haven’t raised a claim.

    Tailor-made Health Plans

    Another advantage of health insurance is that they offer coverage to people with varied health needs. Besides hospitalization, people can also buy medical insurance to ensure coverage for critical illnesses, slow-growing diseases, pregnancy, etc. They have the option to either go for a customized plan or opt for these covers as a rider.

    Moreover, people can choose an individual, family or senior citizen plan depending on the people who need to be insured.

    No Claim Bonus

    All health insurance plans offer no claim bonus benefit. Whenever a policyholder does not raise a claim, he/she is awarded with no claim bonus that enhances the policy sum insured by a certain percentage. This enables you to avail coverage for a higher sum insured without any increase in the premium amount.

    Tax Benefit

    By buying medical insurance, you also get the advantage of tax deductions. As per Section 80D of the Income Tax Act, 1989, health insurance premiums are eligible for tax deductions. This means the amount that you have paid as your policy premium will be eligible for tax savings.

    Disadvantages of Health Insurance

    Here are some of the disadvantages of buying a health insurance policy:

    Waiting Period for Pre-existing Diseases Coverage

    One of the biggest disadvantages of health insurance is that it covers pre-existing diseases after a waiting period. This means you cannot raise a claim for pre-existing diseases as soon as you buy the policy. Instead, you will have to wait for a pre-defined time period before raising a claim for pre-existing diseases.

    Generally, health insurance plans cover pre-existing diseases after a waiting period of 3 or 4 years.

    Premium Hikes with Age

    Another disadvantage of health insurance is that its premium increases with the age of the person. The premium of a health policy is largely determined by the age of the person. The higher is the age of the person, the higher will be the premium. This is because the chances of developing a disease or medical condition increase as the age of a person increases.

    Co-Payment Clause

    Co-payment clause is another disadvantage of health insurance that some people may have to face. If this clause applies to your policy, you will be required to share the claim amount with the insurance company.

    For example: If you raise a claim of Rs 1 lakh and your policy has a 20% co-payment clause, then you will have to pay Rs 20,000 while the remaining Rs 80,000 will be paid by your insurance company.

    Sub-limit/Capping on Coverage Limit

    Some health insurance plans come with the disadvantage of capping or sub-limit. Capping restricts the amount of coverage that the policyholder can claim under a health insurance policy. Capping is generally put on room rent.

    For instance, if your sum insured is Rs 10 lakh and your policy has a capping of 1% on room rent, then your policy will pay up to Rs 10,000 per day for room rent.

    Loading on Premium

    Another disadvantage of health insurance is loading on premiums. Loading is the extra amount charged to an individual over and above his/her premium due to an increased health risk profile. Loading is applied by the insurance company after the pre-policy medical check-up of the customer.

    Should You Buy a Health Insurance Policy?


    Despite a few disadvantages, buying health insurance is a must for everybody. The advantages of buying a health insurance policy are much bigger and far more important than the disadvantages. You may have to pay premiums or a co-payment but you will save much more if your insurance company pays for your hospitalization and medical treatment.

    Therefore, you must buy a health insurance policy for yourself and your family. In fact, make sure to buy health insurance as early in your life as possible. This is because you can easily get a policy and that too for lower premiums if you buy a health policy at an early age.

    Summing It Up

    Health insurance is essential in today’s time to manage ever-increasing medical expenses. You not only protect your hard-earned savings but are also able to get the right treatment at the right time. Just make sure to buy a health insurance policy that best suits your health needs. You can use to compare plans from different companies and accordingly, choose the best plan for yourself.

    Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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