Health insurance is better than a medical loan: here’s why

Let’s start with an example inspired by many real-life scenarios.Rajan believes that he is healthy and that he is unlikely to be diagnosed with a serial disease, and even if he does, he will receive a medical loan. In addition, he believes he can save a lot by not paying an annual premium for health insurance plans. Raghu believes he is healthy too, but he wants to be careful and prepare for any medical emergency. So if you are someone who is not sure whether to side with ragu or ragu, let us help you understand the difference between health insurance and medical credit and why the first option is the best.

The difference between health insurance and medical credit
Loans are certainly useful in difficult times, but wouldn’t you like to avoid them? After all, no one wants an unnecessary debt burden. Instead, when it comes to medical expenses, you can cover yourself financially by buying health insurance. A health insurance plan is something you buy from an insurance company. You choose coverage and pay a premium for it. In case of emergency medical care, the insurer undertakes treatment in accordance with the procedures specified in the policy.

Now let’s assume that you don’t have health insurance and you are hospitalized.Then you will use your savings or borrow money from relatives, friends or the bank, right? This is a medical loan. In any case, you can get the best quality of treatment, but in the latter case, you will pay all the bills. If the treatment is prolonged, you will need more money for knowledge, which can lead to tension in the relationship. If you take it from the bank, the amount of interest will increase your burden.

As long as you pay the premium in advance, regardless of whether you make a claim or not, a medical loan is what you take out when you need it. But there may be a significant difference between the amount you pay as a bonus and the amount you borrow. Processing medical loans can take a long time, and if you need an urgent operation, this period can cost you a lot of money.

Here is an example: let’s say Raghu and Rajan fell ill with a serious illness after five years. And the cost of treatment is 5 lakh rupees. Raghu’s insurer pays the amount because he has a policy for which he pays from 20,000 to 30,000 rupees per year. Rajan uses all his savings and takes out a medical loan in the amount of 2 lakh rupees from the bank. So the calculation is simple, while raghu pays a little more than one lakh for the entire treatment, Rajan pays not only 2 lakh rupees, but also pays interest on the loan amount.

Why is health insurance better than a medical loan?
Here are the main reasons:

Immediate Medical Facilities:
A health insurance plan gives you instant access to medical facilities. Few documents or payments are required to start processing. Don’t waste your time organizing money.

Cashless processing:
Your insurer will have a network of hospitals where you will not have to pay anything in advance. You just need to provide detailed information about your policy and processing will begin. So even if you don’t have much money, it shouldn’t be a problem.

Network hospitals:
The advantage of having an insurer with a large network of hospitals is that you can find quality medical care nearby and get medical care without wasting time.

Unaffected Credit Scores:
Since you will not return any amount to the bank, there is no risk of delaying the payment and negatively affecting your credit rating. Otherwise, it may affect your other loan applications for the car or house you were planning to buy.

As shown in the example above, health care plans are much cheaper than medical loans, especially if the treatment lasts several days.

Additional benefits:
Not only the costs of hospitalization, your insurance will also cover your medical expenses before and after hospitalization. Other benefits include free medical checkups, having top-up plans, daily cash allowance at the hospital, and coverage for alternative therapies, among many others.

Save the tax:
Paying health insurance premiums will help you get a tax refund in accordance with Section 80D of the Income Tax Act. If you are under 60 and older, you can get a maximum deduction of 25,000 rupees, while for the elderly the upper limit is 50,000 rupees.

Now it should be clear to you that a medical loan cannot replace a health insurance plan. During the annual financial planning, allocate an amount for health insurance for all family members. It’s inexpensive, but it can save your life when you need quality medical care.

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