Life is unpredictable; in your happy life, you or your loved ones may suffer health issues all of a sudden, leaving the entire family in a state of bother. Physical, mental and emotional sufferings are imminent with such sad events. Besides, heavy treatment expenses bother you further. Healthcare expenses are rising at around 10-15% a year. However, you have got two options – health insurance vs medical loan – to cover the treatment expenses. While both have their own benefits and limitations, it’s important to know which will suit you. But before drawing comparisons, let’s just define the two first.
Defining Health Insurance
Health insurance is the cover you get for unforeseen health issues you or your loved ones may face. To get health insurance coverage, you need to pay the premium either monthly or yearly to the insurance company from which you buy the health insurance policy. It is renewable every year, every two year or every three year, based on the type of policy you purchase.
Defining Medical Loan
A medical loan is the financial assistance you get from banks or NBFCs when faced with a medical emergency. You need to repay based on the applicable medical loan interest rate. Use the medical loan calculator to know the Equated Monthly Installment (EMI). The EMI calculation will require the loan amount, interest rate and loan period. The loan is usually given for a period of up to 5 years at an interest rate ranging from 11-25% per annum.
Let’s Compare Health Insurance vs Medical Loan
Affordability
Health insurance policies are more affordable than a medical loan. For example, you are 30 years old and meet a health emergency requiring a sum of INR 10 lakh, the premium will be around INR 10,000 a year. In comparison, the medical loan EMI will be INR 22,753, leading to a total payment worth INR 13.65 lakh (approx.) over five years, at an assumed interest rate of 13% per annum.
Accessibility
Medical loan benefits can be accessed in 24-48 hours. Pre-approved loans, on the other hand, can come to you instantly. These loans are offered to people having a good credit history and a smooth existing relationship with banks or NBFCs. But there’s no ruling out the possibilities of late loan disbursals due to procedural formalities, which may annoy you more when faced with a medical emergency. Whereas health insurance benefits can be accessed immediately provided the health emergency takes place 30 days after the policy purchase date.
Coverage
Health insurance plans can come with a few exclusions. Keep in mind the same. Some common exclusions include treatment for sexually transmitted diseases, cosmetic treatment if not needed for survival, etc. But it covers most diseases. There can be certain sub-limits on hospital room rent and other expenditures. So, check the health insurance policy document carefully before choosing a plan.
The medical loan amount will not have to deal with such exclusions. However, accessing the required loan amount will depend on your income, credit score, profession, etc. More income and a good credit score will enable you with the required loan amount. Otherwise, you may have to deal with a lower loan amount and require help from family or friends to pay the remaining expenses.
Cashless Treatment Facility
With health insurance, you don’t need to pay the treatment expenses upfront, provided the treatment happens at the network hospital of the insurance company. Network hospitals are the ones with which the insurance company ties up for cashless treatment. However, you need to intimate the insurance company to access this facility. You need to intimate the insurer 48-72 hours before a planned hospitalisation. Whereas in case of emergency hospitalisations, you must intimate the insurer within 24 hours of admission. Some paperwork will be required at the network hospital. However, with a loan, there’s no such facility.
Wrapping Up
Health insurance is undoubtedly a better alternative than a medical loan. With rising medical expenses, it has become imperative for everyone to have health insurance. Besides, there are child education, home purchase, marriage and other aspirations to fulfil. Getting covered for hefty medical expenses by the best health insurance plan in exchange for the lowest premium will save you enough for all your life goals.
