An emergency fund is your umbrella in rainy days – to help you tide over a sudden need for cash that cannot be met by your regular salary of savings.

The single biggest reason for this sudden need is a medical emergency – for yourself or your family. This could be an accident or an illness. Given the rising cost of health care and the fact that you want the best medical care for your family, expenses can mount up and derail your finances.

Health insurance, therefore, becomes the foundation of your emergency fund. If you don’t have health insurance, you need to plan for a bigger pile of cash in your emergency fund. On the other hand, by paying a relatively small premium, you create access to a large sum of money.

Buy a health insurance plan for yourself, over and above what your employer firm provides. Read here about the factors which you should consider before buying one.

Once you have decided to buy a health insurance cover for yourself and your dependents, you need to ensure that the policy is always in force by paying premiums regularly. Allocate a budget for it other than what you are saving in your Emergency Fund. 

What you can do

Be mindful: You need a health insurance cover that is truly sufficient for yourself and your dependents. This might mean that you might need to get a family health insurance policy if you have dependents or if you don’t have one, then get adequate cover for yourself.

Be cautious: Err on the side of caution in case of health insurance sum assured, especially if you reside in metros. Choose a sum assured that balances what you can afford as premium and what you might actually need.

Go for policies that have a large network of hospitals with cashless coverage. Else you will have to arrange for money to cover hospital expenses and only then claim.

Health is an underrated concern among younger folks, but it’s not something they or you can afford to ignore. Getting a life insurance might be optional based on whether you have dependents or not but a health insurance today is pretty much non-negotiable.