Why is under-insurance a big problem for parents in India?

health insurance Oct 28, 2019

With age, your parents become more prone to diseases and sickness. While they start the second innings of their life, you need to ensure they have a secure guarding over them. A health insurance is a must for all, but to your retired parents, it does not just give them health coverage while you are away, it also gives them an assurance to live their life without worrying about their future financial, concerning health.

What is Under-insurance?

Under-insurance is a state of not having an insurance or lack of adequate insurance coverage. Insurance is a risk-transfer mechanism, a protection that the policyholder creates beforehand to combat future financial losses in various domain like life, health, vehicle or property. Under-insurance creates greater chances of loss that may be developed due to a claim exceeding any marginal savings in insurance premiums.

For instance, you have a health insurance policy of Rs.1,00,000 and due to a mishap, your medical bill overshoots to Rs.1,50,000. So, if you are under-insured, your insurer may even cancel your policy upon claim of Rs.50,000. To avoid such instances you should always take expert help from consultants and companies that provide professional assistance in this sphere.

How do you prevent Under-insurance?

According to the Business Standard, 988 million Indians, i.e. around 75% of Indians are under-insured. It can cause serious issues and they are exposed to financial shock at any given time. So, how can you avoid being under-insured? Talking to your advisor can be a good start to understand your policy requirements and queries. Your advisor will guide you through the process and help you deal with standard errors that would could avoid.

Why is it a problem for the Parents/elderly?

You live miles away from your parents and you know they are slowly ascending to old age. Aging is inescapable but all you wish your parents to be, is healthy and fit. Don’t worry, you can still protect them against unfortunate situations with a suitable health insurance cover. They need to have a customized plan that would secure them from a 360-degree perspective. But how can under-insurance affect your parents? Your parents may suffer from three different kinds of under-insurance:

Economical Under-insurance

Your parents can fall under the pressure of economic under-insurance when they will find it difficult to cope up with the additional medical expenses. It will become a financial burden for them and it hinders their standard of living. Spending more than a significant amount on medicine, treatment and tests can make them financially unstable. Also, the term economic underinsurance is used when your parents means to delay or undergo only vital medical treatments that can’t be avoided. Here the financial constraints do not allow them to have a complete structural treatment process to rely on.

Attitudinal Under-insurance

This occurs when the policyholder is unsatisfied with the policy and its ability to cover, either one such criteria of health protection that is needed immediately, any health insurance benefits that they prefer having in the clause or they are unhappy with the complete insurance plan. The healthcare benefits of the insurance fail to protect the necessary requirements of the individual and thus it causes attitudinal underinsurance. The health insurance is not well crafted as per the needs of your parents. They lack personalization which is felt missing by your parents at the verge of time. They are well insecured.

Structural Under-insurance

Structural insurance covers both ends of the deal, the benefits provided by the insurance company and also the number and range of providers whose services are covered under the identified plan. There is a structure that must be followed to intact a flow of the procedure. While under structural under-insurance this flow is disrupted and at least one benefit in the benchmark package is not covered by a policyholder's health insurance plan. Your parents would feel they are stuck in a fragmented policy that won’t help them in any possible way. It may be the glitch of the insurance company or the healthcare providers but your parents suffer the consequences of such things.

How will under-insurance hinder your parent’s daily living

Financial Crisis

The sudden medical emergency is already a blowout for your parents and a financial crisis will break their backbone. Under-insurance does that to people. They will be in a turmoil how to pay the medical expenses, manage households and pay liabilities. All at once.

Social downscale

Your parents are probably in a period of life after retirement. They would expect to have a content life of leisure. Under-insurance can be life changing, with no direct income and a medical crisis, they might have to compromise on their standard of living. They may feel to be declining in the socio-economic strata.

No security

A health insurance provides an assurance to be there in the time of grave chaos. Your parents would feel insecure in case of under-insurance and constantly threatened by any illness or sickness.

Mental stress

Mental stress is the basic cause of major health issues. Your parents would constantly think about the ‘what if’ factors and lose their peace of mind. Under-insurance does this, they don’t know about the policy and what it covers. Ignorance also leads to choosing of wrong insurance plans and they might end up spending more than what is covered.

AskArvi as a company, educates you with the complete picture of Health Insurance. It helps your parents make a well-informed decision about their health and their future. We know how difficult it is to deal with the entire process of having an health insurance. To avoid overlooking vital characteristics, you can connect to our Health Managers (HM’s). They are always there to assist you and your parents throughout the entire process of investment, claim and recovery. We look forward to serving at every opportunity that delivers you good health.

Sushant Reddy

Sushant is a serial entrepreneur who is passionate about transforming senior heatlhcare in India