Evaluating the True Value of Health Insurance

Is Health Insurance an Asset or Expense? A Complete Guide

A significant question for anyone buying a health insurance policy is, “Is insurance worth the money?” or “Is insurance an asset or expense?” Some argue for its necessity, while others believe it is better to be prepared. This blog will evaluate whether and how insurance is relevant to people in India.

Keep reading to learn about the various aspects of health insurance and to understand whether insurance is an asset or an expense.

How Does Health Insurance Work?

The basic step to knowing whether health insurance is an asset or an expense is to understand what health insurance means. It acts as a contract between the insurance company and the policyholder, providing financial coverage for the medical expenses incurred during an illness or injury.

The mechanism of health insurance is that the policyholder pays a fixed amount as a premium on a monthly, quarterly, or annual basis, in exchange for which the insurance company provides financial coverage against the medical expenses incurred.

There is a wide variety of health insurance policies to choose from that best suit your needs. Insurance policies help you avail yourself of quality services with peace of mind.

Typically, an insurance policy covers a wide range of expenses, such as:

• Hospital Stays
• Preventive Care
• Doctor Visits
• Emergency Services
• Medications, etc.
   

The insurance company covers your medical expenses primarily through one of the two available methods:

• Cashless Claims: The insurance company has a network contract with the hospital and pays the hospital directly. The policyholder does not have to pay the network hospital.
• Reimbursement Claims: The policyholder has to pay the hospital initially. The expenses incurred by the insured are later paid when the concerned person makes a reimbursement request.
   

Which People Benefit the Most From Health Insurance?

Rising medical care costs have made health insurance essential. Moreover, our hectic lifestyle only makes things worse for our health. Since health emergencies are becoming more unpredictable daily, getting health insurance as early as possible is advised.

The primary key groups that benefit from having health insurance include:

• Patients with Chronic Conditions: Individuals with ongoing health issues who need coverage for their medications and treatments, quite often
• Young Individuals: Individuals who choose to stay protected against unannounced health emergencies.
• Parents: Parents who seek preventive therapies and care for their children.
• Working Individuals: Generally, the employer provides health insurance to its employees as part of the benefits.
• Self-Employed Individuals: Health insurance comes in handy if you do not have coverage provided by your employer.
   

What are the benefits of health insurance?

Health insurance has several benefits, not just the medical benefits everyone knows about. Some of the key benefits include:

1. Financial Protection: The basic advantage of health insurance is financial protection against expensive medical bills in an unexpected medical emergency. Health insurance can help you cover the costs of treatments and medications.
2. Peace of Mind: Having health insurance automatically removes a considerable burden from your shoulders. You can solely focus on getting the best treatment available rather than worrying about how you will pay the medical bills.
3. Access to Quality Healthcare: With health insurance covering your medical expenses, all you need to think about is the best treatment options available. You can choose the best treatment option available without the financial barriers.
4. Tax Benefits: Health insurance also offers certain tax benefits. Under Section 80D of the Income Tax Act, you can claim a deduction on the premium you are paying for your health insurance.
    

At Star Health, we offer extensive coverage for various health conditions under our insurance policies, specially tailored to your needs. We also provide hassle-free claim settlements with reduced turnaround time across over 16,000 network hospitals in India.

Is Health Insurance Worth It?

Let’s look at the answer to the question, Is health insurance worth it? The short answer is yes! Buying a health insurance policy is worth it because it covers hospitalisation expenses and also includes OPD visits, medications, diagnostic tests, and both pre- and post-hospitalisation expenses.

After understanding the benefits of health insurance, the original question remains, “Is insurance an expense?” There seems to be no straightforward answer. However, it can be stated clearly that health insurance is a necessary expense. The reasons include:

• Rising Medical Costs: The expenses for decent quality healthcare are already high, and these costs are expected to increase. In such testing times, health insurance becomes more of a necessity than a luxury.
• Unprecedented Medical Emergencies: Today’s unhealthy lifestyle has increased the incidence of medical emergencies manifold, especially for the younger generations. Health insurance keeps you prepared for such emergencies.
• Preventive Coverage: Health insurance covers not only emergency medical expenses but also certain expenses like OPD visits, diagnostic tests, medications, and pre- and post-hospitalisation charges.
   

Whether health insurance is an expense or an asset is debatable; however, it is certainly an expense that becomes an asset over time. So when asking, is health insurance worth it in India? The answer is a clear yes. It is because relying entirely on savings is insufficient, as well as risky.

Reader Information: The Section 80D tax benefits discussed are applicable only under the old tax regime, subject to prevailing tax laws and regulations.