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Whereas mediclaim cover for the younger people has become wide ranging and comprehensive, the insurance for the elderly is rather restricted.
Medical insurance policies for the elderly are a little tricky for most customers to understand. For one, very few of the insurers are offering it and among those who are offering, virtually every insurer offers a risk sharing option – where there is a co-payment on every claim. For most customers, this is a little difficult to grasp. Essentially, the risk of hospitalization is very high in case of the elderly, which prevents insurers from taking a 100% risk. Buyers need to be aware of this and also understand the fact that even a 20-30% of co-payment is not a bad idea, since it is this co-payment that helps keep insurance premiums in check. In the absence of co-payment, the premiums would have been very high and would not make any practical sense.
There are companies that offer life-long cover, but do not allow entry after a certain age. For example, if you are a customer of Apollo Munich and you keep renewing your policy every year, you are assured of cover for your entire life. However, if you are older than 65 years and have no previous insurance policy running, you will not be able to get an insurance policy from Apollo Munich. On the other hand, Max Bupa offers both life-long cover and an entry at any age.
The PSU companies offer a senior citizen’s policy, but they restrict the cover to Rs 1 lakh only, which is likely to be inadequate in today’s times. There are other companies which offer higher cover (even up to 5 lakhs) but insist on high co-payment (up to 50%), which again limit the cover.
There are also various sub limits on room rents, on individual surgeries, on pre existing conditions and others.
Apart from the restrictions the cost of insurance itself is very expensive for the elderly. Whereas in your thirties you can get a cover 60-70 times your annual premium, the multiple reduces to about 30-40 when you hit 50 and dips to under 15 in your sixties. By the time you reach your seventies, the multiple is in single digits. This low multiple combined with co-pay and several restrictions and exclusions implies that you have really very little leverage left and one may start wondering whether the indemnity insurance is worth it at all.
For those who have already reached this age, there is really very little that they can do except to go with what is available. However, those who are younger and are planning for the future, they would be well advised not to depend solely on the indemnity insurance (mediclaim) for hospitalization cover in their old age.
The logical alternative is to create a corpus which will grow in size and be available for medical needs during that time. There are several ways in which such a corpus can be built and here insurance companies do offer an efficient solution which builds corpus and saves on taxes. Although the corpus itself may grow at only 6-7% (or higher in case