Hi Friend,
To be rich we have to think like the rich and we have to understand money like the rich do. Here is what one of the richest ever has to say about growing wealth.
“Rule No.1: Never lose money, Rule No.2: Never forget rule No.1” -- Warren Buffett
Because rich people understand the above principle better than most of us, they give it due importance and try to plug the possible sources of losing money.
A higher number of relatively well off people buying health insurance than the people who need it the most (not so well off people) need to be seen in this context.
Cost of not buying Health Insurance:
Let us assume that the life expectancy of a person is 75 years. If a person who is 30 years of age and just started his / her financial planning had to lose Rs.3,00,000/- due to some unexpected medical expenditure, he / she will be losing that money and possible returns on it for the remaining financial planning period i.e. 45 years( 75 - 30).
Had the money been not lost and had it been invested at 17 % (which is the approximate compounded return of SENSEX since its inception) it would have grown in to Rs.35, 11, 43, 823/-, Shocking isn’t it?
You may make use of the following link to do the calculation,
But, is there any guarantee that such medical expenditure won’t repeat in future?
The more the number of such uncovered health care costs, the farther we will be from having financial security and from our dream to be rich.
We need to buy health insurance precisely to plug such huge financial leakages.
The government too understands this fact (i.e. health care costs could cripple a vast majority of Indian populace given their low income status) and hence the tax benefits it gives us to encourage buying health insurance.
The need to buy our own Health Policy Vs Company Group Health Cover:
Given the current stressful lives it is likely that we may develop a health condition even before we cross 40 years of age.
No insurance company would like to take on a certain risk and hence it is highly unlikely that they will issue a quality health cover if we develop a health condition.
It is always advisable to buy health insurance when we are young and healthy as a policy once issued will be continued even if we develop a health condition.
Company health covers are too fickle (could vary in quantum and quality depending on a lot of factors that are not in our control) to be assigned with the all important responsibility of safe guarding our financial plan.
Consider this, if a person gets hospitalized due to an accident or due to some other serious health issue and exhausts all his leaves, how long will he be continued in the job? If there is no job will there be a group health cover?
How likely is that any health insurance company will be willing to issue a fresh policy in such a scenario?
The purpose of Insurance is to cover the extreme impact events and a group cover may not serve purpose in such scenarios.
Considering the above it is better to buy our own health policy (we know what we get in these policies and are sure that the benefits given will be continued as long as we pay the premium).
Happy Investing.
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