Do you need to have health insurance and health emergency funds? Or is one of them enough?

Here in this article, I have tried to explore the pros and cons of the above options.

Health insurance policies, in many cases, will not settle 100% of the claim.

In addition, health insurance claims can be rejected in some cases, especially cashless claims.

Moreover, there is no clear control over health insurance companies for increasing the health insurance premiums.

Finally, all the above factors make an individual think about a health emergency fund in place of a health insurance policy.

Health Emergency Fund vs Health Insurance: Which is better? …

Health Emergency Fund Advantages…

• You have full access to the fund.
• And no need to wait for the health insurance claim to be settled, especially the cashless claim.
• In addition, you know whether you can afford the hospitalisation or not up front.
• In case You have not given health insurance because of existing health conditions? This fund is a must for you.
• Sometimes, the premium may be too high because of some existing health problems; then also this fund is good for you.
• No more tensions of hospitals playing with you and with health insurance for you having health insurance.
• And no fear of a premium hike due to an increase in your age, especially in old age.
• In addition, you will lead a healthy lifestyle for not having health insurance, which may lead to fewer hospitalisations, and the fund may last longer.
• However, it needs some luck.

Health emergency fund disadvantages…

• In case of hospitalisation, this fund will reduce, then you need to fill again, as you do not know the next hospitalisation.
• In addition, the hospitalisation costs will increase every year due to inflation, so the fund you created now may not be sufficient in the future.
• Finally, You may spend this emergency fund for some unnecessary needs sometimes, like buying a TV, etc.

Health Insurance Advantages…

Restoration Benefit…

In case the health insurance coverage is fully used due to hospitalisation?

Then the coverage is fully restored up to 100% (some conditions will apply depending on the policy conditions).

And this facility allows you to feel relief from not having enough health insurance cover.

You will pay only the premium…

If there is a claim in a year for 50 lakh, then also you will pay only the premium to the health insurance.

But in case of usage of 50 lakh emergency funds for hospitalisation, you need to fill again and fill the fund with 50 lakh.

Benefit of No Claim Bonus…

If there is no claim for multiple years, then you will get a no-claim bonus.

And this bonus will be between 5% and 50%

In addition, this bonus can go up to a maximum of 50% to 100% in total.

Finally, this bonus will reduce gradually once there are multiple claims.

Disadvantages of Health Insurance…

There is no control for you over the increment of premiums.

Moreover, you have to be fearful about the claim settlement and should rely on the mercy of the companies.

Conclusion about Health Emergency Fund vs Health Insurance…

Both the health emergency fund and health insurance have pros and cons.

In addition, it is always wise to have a good base health insurance policy with a super top policy when you are young or healthy.

And at the same time, You should have some emergency fund also, as the health insurance policy may not give 100% claim, like frequent traveling expenses in case of cancer, etc.

Read about the health insurance loss calculator…

Also read about PPF vs SSY – which is good for a girl child?

And read about MWP act benefits in India – all you need to know.

Also read Why are guaranteed income or bonus policies bad? …

And read about private health insurance worth in India?