Before choosing a health insurance, consider these thumb rules:
Thumb Rule 1: Insurance is not investment.
No matter how enticing it is, stay away from insurance plans where you’ll get back invested money in some time.
Thumb Rule 2: You are the best judge of your requirements.
Read this article, listen to insurance experts and agents but make sure to use your brain and do your homework to the best of your ability before making a decision to buy a plan. You would agree with me that current global and local markets are more profit driven than are well being driven. Very few people in your life and out of your life would actually care about your well-being as long as they are able to make profit from you. I believe our markets will eventually shift towards well-being by 2040 (read my article- 2024 – Part 1 – Your investment opportunities in the upcoming most painful suffering of humanity )But until then you must take good care of yourself and your loved ones.
Thumb Rule 3: Best time to take insurance is now. More you delay, costlier it would be.
Even if you have a health pan from your employer, I would recommend to have your own health plan. I learned this thumb rule painfully. While I was in India, I had all sorts of insurances from my organization and never felt a need to have any more personal plan. I remember the day, when I had a friendly debate with my manager on this topic. He told me, life is uncertain, you never know if you are going to be in this company forever. If you switch company you would not know if they will have an insurance plan for their employees. And I said to him, there is no company who doesn’t give insurance to employees and I’m not going to work for small organization, I’m only going to work for multinational companies. 4 years later I got an opportunity in Singapore in a bigger company and I took it. 6 months latter I had medical expense of $15000 and then I realized that I can only claim for $50. So, my point is that, buy an insurance plan that suit your requirement before it’s too late.
Thumb Rule 4: In normal circumstances, limit all of you and your family insurances premium within 10% of your yearly earnings.
Remember thumb rule 1, Insurance is not investment. You do not expect that money to comeback. You are only covering risk of a contingency. Try to cover-up all your insurances including life(term) insurance, health and accident insurance in 5% of your earning and don’t go beyond 10%.
Thumb Rule 5: Insurance, savings, investments happen as a result of discipline and habit and has nothing to do with how much you earn.
If you are waiting for your salary to rise before you can start saving, take insurance and do investments, then mark my words you are on wrong boat. Because of lack financial literacy, many celebrities, jack-pot and reality show and game winners lose money faster than they earned it. Losing a million dollar in a day is not a big deal but saving 30% of your earning, is a big deal for someone who earn $1000 /year and also for someone who earn $1000/ second.
Thumb Rule 6: Other than your loved ones nurture good relationship with those individuals also, who could lend you money in emergency.
Insurance in itself is not sufficient. Study shows and Banks know this, that people who regularly call their loved ones and are in touch with them have much lower chances of default. Another study shows that the happiness can be extended most if you have healthy relationships with your family and loved ones.
Keeping these thumb rules in mind now you only need to know 3 jargons of insurance to be able to avoid confusions and make better choices.