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How To Avoid Being Underinsured?

Arjun is a healthy 30-year-old with no medical background, but his doctor found a mass in his lungs during a routine check-up and ordered further tests. Thankfully, the mass became benign, and no medical intervention was needed, but Arjun's experience was eye-opening. He knew that his current health insurance would not be sufficient to cover the expense of any medical procedure he would need.

Unfortunately, not everyone is as fortunate as Arjun, and many of us are unaware of how insufficient our existing individual health insurance coverage is until it is too late. Underinsurance is a term used to describe a case in which a person's insurance coverage is inadequate.

In this blog, we will talk about what underinsurance is, how to know if you are underinsured, and how to get sufficiently insured.

What is Underinsurance?

Underinsurance gets described as having inadequate Health Insurance coverage to adequately protect one's financial goals or the financial future of their dependents in the event of an emergency. While buying individual health insurance plans does not guarantee that insured persons can prevent unexpected events, being adequately insured will help you and your loved ones avoid financial distress if the unthinkable occurs. 

Since being underinsured will result in substantial financial costs in an emergency, it is critical to identify the warning signs and act until it is too late.

  • If you are a salaried employee, your employer's Group Health Insurance benefits will cover you and your dependents. Group Insurance Plans, on the other hand, often have small insurance coverage of Rs. 3 to 5 lakh. If both parents work and have different Group Insurance from their respective employers, this would be sufficient for a small family of two.However, if you have dependents like children or parents, this restricted coverage cannot be enough to cover unexpected medical costs. It is also worth remembering that a Group Insurance Plan is only valid when you are working. You and your dependents will lose Group Health Insurance benefits if you change employers or get laid off in the future, and there is no assurance that your new employer will have equal coverage. 
  • It is always advised that you buy insurance while you are young because it is prudent to do. After all, you would be paying a lower premium. However, once we have a health insurance plan in place, a few bother to update it or buy extra coverage, even after significant life events like marriage and having children.When you have more dependents and financial responsibilities, you should expand your insurance coverage to protect your loved ones' future finances better. 

If it has been five years or more since you acquired your insurance policy, consider expanding your current individual health insurance or buying extra insurance to supplement your recent coverage.