A health insurance policy is not an investment but it can potentially make you a better investor. Let’s first discuss why a health insurance policy is a must. A comprehensive policy covers any sudden large-sized medical expenses. The biggest merit of a health insurance policy is that you can get a large cover early in life at a very low cost and also access to hospitals which otherwise may be unaffordable. 

Its primary function aside, getting a health insurance policy can add a lot to your investment journey too. 

Freeing up cash flow

When you get a comprehensive health insurance policy for yourself and/or your family members, it means that large expenses in case of hospitalization are now outsourced to the insurance company and you don’t have to bear them or plan for them. This frees up your savings which can now get invested in long term assets. 

Medical expenses are unlikely to reduce in the future and hence, ensuring that you don’t end up spending your savings on needlessly high bills is important. A sudden appendix surgery, for example, will always come unannounced and can set you back anywhere between Rs 2-4 lakhs depending on the hospital you choose. 

However, if you have a health insurance plan in place, you don’t have to provide for this amount from your savings. 

For an annual premium of approximately Rs 12,000, a 40-year-old can get a health insurance cover of anywhere between Rs 10-30 lakhs. Freeing up that kind of liquidity which otherwise you would have to account for through your savings makes a big difference to the investment portfolio. 

With health emergencies taken care of through a good insurance plan, your mental energy can now focus on wealth creation through your professional gains and your investments. 

Freeing you from anxiety

Sometimes you will simply not have enough saved up to account for the kind of medical expenses a family can face. Unexpected hospitalization for 2 weeks, for example, can set you back by Rs 5-6 lakhs depending on the surgery and hospital. If you haven’t provided for this or don’t have the liquidity to pay the expenses, you will end up borrowing and that causes needless anxiety. 

You can’t ignore expenses for things like accident-related surgery or other important surgeries. Now imagine what expenses can potentially look like for a family with children and elderly to take care of. Without at least a few tens of lakhs set aside for medical emergencies, you will always be anxious. 

Along with hospitalization expenses, a good health insurance policy will have some provision for reimbursing regular health check-ups and pre and post hospitalization expenses too. Moreover, some even offer a doctor on call service when you need someone urgently at home. 

With health emergencies taken care of through a good insurance plan, your mental energy can now focus on wealth creation through your professional gains and your investments. 

Health insurance policies take care of medical expenses, free up cash flow and relieve you from mental anxiety. All this can then be channelized to effective long term investing for growing your wealth.