What Are The Benefits Of Buying Health Insurance At A Younger Age

A report by the NFHS says that only 20% of women and 23% of men between the ages 15-49 are covered by health insurance. These statistics clearly display that a majority of the population believe that health insurance is helpful only when you’re older when diseases are more common.

But, unfortunately, this isn’t true. Given the unpredictable nature of life, you never really know when an emergency may strike.

So, when is the right time to buy health insurance? Is there any advantage of buying a health insurance policy while you are young and healthy, even when the chances of hospitalisation are pretty slim? Let’s find out.
 

Two Arguments Raised By People For Not Buying Health Insurance Early

• Premiums Are Not Fixed Like Term Insurance

  If you buy a health insurance plan early, your premiums do not freeze like they do with term insurance. In health insurance, your premium increases with age; the older you are, the more expensive your policy will be. At 30, you pay the same premium, regardless of whether you entered into the policy at age 20 or 25, or 30.

• My Employer Covers Me At A Young Age, I Will Port Later

  You might wonder why you should buy health insurance at a young age when you have an employer policy. Additionally, portability is available - so if you want to switch to a retail plan, you can do so anytime.

But, these arguments don’t make sense. Let’s take a look at why.
 

Here’s Why You Should Buy Health Insurance At A Younger Age - Even If Your Employer Covers You

• Premiums Won’t Remain The Same If There Is A Health Condition

  As a young adult, you might wonder why you should pay a premium for health insurance when you are healthy and will never make a claim. You are not entirely wrong here. However, you should keep in mind that premiums for health insurance keep changing almost every year and on top of that, healthcare costs are also rising due to inflation.

  The premium you pay today may not be the same in a few years, and if you contract an illness or disease, the cost may increase even further.

  A health insurance policy that may seem unnecessary today, will be your saviour in the future. It is wise to buy the policy while you are young so that you can save on your premiums both now and in the future.

• Coverage Ends When You Quit Or Say You Join An Early Stage Startup

  Having coverage only through your employer has many limitations. You will only be covered while you are working for them. If you leave your job, you will also lose the insurance that came with the job. Employer policies are chosen by the employer and will not be customised to meet your needs.

  Do you think an employer policy will be enough? It may work for you if you're positive enough that you won't get ill or contract disease ever in your life. But, how sure can you be about that?

• Ideal For Getting Comprehensive Coverage

  Insurers evaluate your health risk at the time of purchasing the policy. Once your health evaluation is done, the policy terms remain unchanged throughout the policy period. There is no change to the plan based on claims or medical conditions diagnosed after purchasing it.

  When you are young and fit, you are less prone to any illness or any disease and hence are less likely to make a claim. Insurance companies are keen on covering such customers - so you can get the best, most comprehensive insurance plans.

  A health condition or disease dramatically reduces your chances of getting a comprehensive insurance policy.

  For instance, 25-year-old Naina did not purchase the comprehensive health insurance offered to her when she was fit and healthy. Five years later, she was diagnosed with hypertension and wishes to apply for the same comprehensive health insurance plan.

  Insurance companies view young people with chronic lifestyle diseases as a higher risk than someone who is 50 and has recently been diagnosed with the same disease. Age-induced diseases are considered natural, compared to lifestyle-induced diseases caused at a young age.

  In this case, the chances of Naina receiving the same plan offered to her when she was young and healthy are slimmer. So, she may have to either -

1. Pay an additional premium (called loading) or

2. Buy an inferior plan that has limits and conditions or face her proposal getting rejected.

Let's compare the features offered by a comprehensive plan and one offered to people with lifestyle diseases:

Modern lifestyles, including work stress, food habits, smoking, drinking, etc., and the environment degraded by pollution are all contributing factors to chronic diseases (cancer, cardiac ailments, etc.) at a younger age.

On the other hand, not everyone suffers chronic diseases at an early age, but, you never know when you can be hospitalised for infectious diseases, such as Dengue and Malaria, or for injuries sustained from accidents. So, buying the policy early and not taking the risk of rejection later is a no-brainer.

• Exhaust All Mandatory Waiting Periods Before You Get Old

A waiting period is a duration after policy purchase during which the insurer doesn’t cover you for any expenses related to the hospitalisation of certain diseases, specific surgeries, pre-existing illnesses, and special treatments as mentioned in their policy wording. Any hospitalisation expenses you incur during this period cannot be claimed, so you must pay them out of your own pocket.

Summary of waiting periods

If you purchase a policy when you are young and healthy, say at the age of 20 or 25, you serve the waiting period while you are not in need of health insurance. By the time you reach the point when you may make a claim, the waiting period will most likely be over.

• No Medical Check-Ups

  If you are 45 years or older, most insurance companies require you to undergo a health check-up. This is because, at this age, you are more likely to fall ill and make a claim. Therefore, your insurer will have to make sure that you are not a risky individual to cover before approving your application.

  When you purchase a policy at a younger age, there will be no medical check-ups required, unless your application form mentions any existing illness or lifestyle condition.

• Tax Benefits U/S 80D

  Under Section 80D of the Income Tax Act, you are eligible for income tax exemptions by purchasing a health policy. So, if you buy a health insurance plan at a young age, you can start taking advantage of this benefit sooner!

• No Claim Bonus

  When you do not make any claims during your policy year, health insurance companies offer you a reward called No Claim Bonus.

This no claim bonus is provided in 2 ways -

1. Increasing your sum insured for the same premium or

2. Reducing the premium by a certain percentage.

The chances of you filing claims are lower at a young age, so with every renewal of a claim-free year, you will earn a No Claim Bonus. You can, thus, enjoy an increased cover in later years, thanks to the No Claim Bonus accrued over the years.

• Portability From Employer Policy Has Its Own Ifs And Buts

  Portability is a process through which you can transfer your current health insurance policy to another insurance provider of your choice. The portability process will either be -

1. Smooth

   As long as you have not filed any claims or don't have a disease at the time of transfer, the process should go smoothly.

2. Challenging

   Incoming insurers can decline portability based on past claims or medical history. Therefore, it is better to avoid taking a chance at an older age when disease/conditions could complicate the situation.
    

Wrapping Up!

As the old saying goes, “Time and tide wait for none” - the right time to purchase health insurance is when you realise that your health costs might only increase due to rising costs of living and other factors. The earlier, the better. Hence, to maximise your health insurance benefits, you should consider purchasing a health insurance policy at an early age.