Health insurance in your 20s: Worth buying early?

Young professionals often wonder whether purchasing health insurance in their 20s is beneficial, especially when they already have coverage through their employer. While employer-provided health insurance can be reassuring, it may not remain constant throughout life. Job changes, layoffs, sabbaticals or entrepreneurship could lead to a gap in health protection. Unexpected health issues, such as accidents or illnesses, can result in substantial medical bills, which may not be fully covered by corporate insurance.

Hari Radhakrishnan, Expert from Insurance Brokers Association of India (IBAI), emphasizes that health risks can arise at any age, making it prudent for young professionals to secure their own health cover early. This is due to the genetic and inherited risk factors associated with early-onset conditions, as well as the potential for serious accidents leading to surgery and hospitalization.

Additionally, purchasing a policy at a younger age can result in lower premiums and allow the waiting periods to be completed before the need for coverage arises.

Sarita Joshi, Head of Health and Life Insurance at Probus, highlights several advantages of buying health insurance early. Firstly, premiums tend to be lower when purchasing at a younger age compared to older ages. Secondly, waiting periods for pre-existing diseases or specific ailments can be covered while the individual is still healthy and unlikely to require a claim.

Furthermore, younger applicants may undergo simpler medical underwriting, although medical tests may still be necessary depending on the insurer and policy. Lastly, early policy purchase can help build a No Claim Bonus (NCB) and a cumulative sum insured, which can grow over time.

However, young professionals must also consider their financial situation and opportunity cost when deciding to buy health insurance. Balancing essential expenses like rent, education loans, and emergency funds can be challenging, making it difficult for early-career professionals to allocate a significant portion of their income towards insurance.

According to Abhishek Bansal, CEO at InsuranceDekho, the focus should be on obtaining adequate and sustainable protection rather than purchasing the largest possible policy. The objective is to ensure that the individual has sufficient coverage to handle unexpected hospitalization without significantly disrupting their savings and other financial goals.

It is crucial to note that health insurance policies usually have waiting periods, exclusions, deductibles, co-payments, room-rent restrictions, and disease-specific sub-limits, which can affect the amount payable by the insurer. Consequently, the key question is not whether the policy will be used immediately but whether the individual has adequate protection to absorb an unexpected hospitalization without significantly impacting their financial stability.

As income and responsibilities increase, young professionals can consider upgrading their health cover. Starting with a reasonably basic plan purchased at a young age, with an affordable sum insured, can be a practical approach. Later, as income rises, a super top-up plan can be added to enhance the coverage. This strategy allows for the gradual growth of protection aligned with the individual's financial situation and responsibilities.

Before purchasing a separate policy, young professionals should carefully evaluate factors such as sum insured, waiting periods, room-rent restrictions, co-payment, deductibles, exclusions, sub-limits, and portability. By considering these aspects, they can secure meaningful cover that fits comfortably within their budget and can be maintained in the long term.