Secure Your Financial Freedom with Health Insurance

India is all set to celebrate its 78th year of independence, and it’s time to reflect on what it means to be truly independent. It is not just political or physical independence that matters, but also financial. Achieving financial freedom is a dream for many, but it can be elusive without the right strategies. It involves building a safety net for your loved ones and planning for the future. One of the most critical components of financial planning is health insurance. Yet, people often overlook it. In an uncertain world, health insurance eases your financial stress in case of medical emergencies so you can focus on your well-being. In this article, we will learn more about financial planning and how to achieve it by investing in health insurance.  

What is Financial Independence? 

Financial freedom is a term subjective to one’s outlook. Generally, you can live a comfortable life without worrying about money. It is a state where you have sufficient savings, income, or investments to support your lifestyle without relying on regular work. It allows you to live on your terms, retire comfortably, or pursue your passions without budget constraints. However, it requires careful planning, budgeting, and wise investment choices.  

How to Achieve Financial Freedom?

Here are a few essential strategies with which you can achieve financial independence:

Set Your Financial Goals 

The first step towards attaining financial independence is to set clear goals. What are your future plans? How much corpus is required to achieve early retirement or to fulfil your hobbies? How much emergency funding is required? Get answers to these questions and identify how much savings, investments, and wealth accumulation are essential for independent living. Set measurable goals to motivate yourself and track your financial journey. 

Creating a Budget 

The foundational step in financial planning is creating a monthly budget. By planning a budget and sticking to it, you can make informed decisions. Furthermore, monitoring your income and expense patterns allows you to save and invest more effectively. Avoid unnecessary expenses and focus on your needs to improve your savings.

Building an Emergency Corpus

Life uncertainties can drain your savings. Therefore, being prepared for such events is necessary. Building an emergency fund of at least six months' worth of living expenses is suggested. An emergency corpus is your financial cushion against unexpected medical expenses and provides security in case of a sudden job loss. 

Investing Wisely 

Investing is a vital component of your financial planning. You can contribute some of your income to various investment options per your financial goals and risk tolerance. You can achieve financial independence by creating a diverse portfolio of assets like stocks, mutual funds, bonds, SIPs, or real estate, which will generate passive income for you. Make sure to review and modify your investment strategy for higher returns.

Reducing Debt

Paying off high debt is essential to avoid financial drain and roadblocks to your financial planning. Paying off high-interest debts, like those from credit card bills and loans, should be on your priority list. Adapt repayment strategies like snowball and avalanche to swiftly eliminate your debt. Make sure that most of your earnings are directed towards savings and investments. 

Keep a Check on Your Credit Score

It is advisable to check your credit score once a month. It helps you understand your credit position and overall financial status. Reviewing your credit reports enables you to detect errors, discrepancies, or incomplete information. For a strong credit profile, pay your bills on time, keep your credit utilisation ratio below 30%, and review credit reports regularly. A strong profile gives you better interest rates and more financial opportunities. 

Become Financially Literate

Lastly, educate yourself on personal finance, investing, and wealth management to make informed decisions. If necessary, seek help from financial advisors for personalised guidance and customised strategies. 

Why is Health Insurance Important in Financial Planning? 

It’s 2024, and purchasing health insurance is more important than ever. It is not just a financial tool; it’s a safety net that protects you and your family from life’s uncertainties. It ensures that unexpected medical emergencies do not deplete your savings and investments. It is a safety net that mitigates the impact of sky-rocketing expenses on your medical treatments, hospitalisation, surgeries, tests, procedures, and medications. Let’s learn how health insurance integrates into your financial planning:

Protection Against Medical Emergencies

Medical emergencies don’t always come with a warning. Witnessing the chaotic pandemic outbursts made us realise the uncertainties of life and the importance of health insurance. Without health insurance, people have to pay bills out of their pockets, which forces them to dip into their hard-earned savings or sell off their personal assets. Health insurance prevents such unexpected health-related expenses. Purchasing a health insurance plan ensures these expenses are covered, providing financial safety. 

Inflation and Rising Healthcare 

Medical inflation in India is the highest in Asia, at around 14%, and unfortunately, only a few have access to healthcare facilities. Without adequate health insurance, sudden medical expenses can severely impact your savings. Comprehensive health insurance can act as a buffer against rising inflation by covering expenses that would otherwise undermine your financial independence.  

Retirement Planning 

With India's ageing population, the need for health insurance is increasing. Once you retire, you don’t earn a fixed income. Therefore, retirement planning should include securing adequate health coverage that covers the medical bills likely to arise as you age. 

Tax Benefits 

It is one of the key aspects of financial planning. By investing in health insurance, you secure your health and save on taxes. Under Section 80D of income tax, your taxable income is exempt from tax deductions if you are paying a health insurance premium. Therefore, it is a financially prudent choice among taxpayers. You can allocate those savings towards your financial goals by saving on these taxes.

Chronic Disease Prevention 

Health insurance plans include wellness programs, regular checkups, and OPD benefits that promote early detection and prevention of chronic diseases. By staying healthy, you can prevent hefty medical bills down the line, thus preserving your finances. 

Maintaining Finances 

Money saved on unexpected medical expenses can be redirected towards building your financial corpus. It can be used for assets that contribute to your financial independence. Therefore, getting health insurance ensures that, at difficult times, you don’t have to eat on your savings, take loans, or seek help from relatives, thus saving you from painful debt.

Wellness Programmes 

Many insurers reward policyholders for engaging in healthy activities such as regular exercise, annual health check-ups, and maintaining a balanced diet. These incentives can range from discounts on premiums to cashback rewards or gift vouchers. Participating in these activities can reduce overall healthcare costs, contributing to better financial planning and healthy independence.

Overall, health insurance gives individuals peace of mind, knowing they are financially protected in medical emergencies. 

Strategies for Independent and Healthy Living

Early Bird Takes the Worm 

The above saying applies to health insurance too! If you purchase health insurance early, you can avail of it at lower premium rates. It is so because you are healthy when you are young and less prone to serious illness; ultimately, it lowers the risk. The insurer may offer comprehensive coverage with top-up benefits, and you can quickly get off with the waiting period. This will prove helpful later in life when you are more vulnerable to major health issues and require financial coverage for your medical bills. 

Ensuring Adequate Health Coverage  

Being medically fit can save you a lot of money. However, a single medical emergency in your family can wipe off all your savings, derailing your journey to financial freedom. Therefore, investing in a financial saving tool like health insurance can help you save a lot on your medical bills. But when families are underinsured, medical emergencies can cost them a fortune. Hence, it is crucial to ensure you cover yourself and your family under the insurance umbrella with sufficient health coverage. According to insurance experts, a minimum sum insured of Rs. 5–10 lakh is necessary. 

Also, solely depending on health insurance provided by your employer can deplete your hard-earned savings. The insurance provided by the company does not suffice; it depends on the company’s budget and the number of employees covered under the same insurance. Therefore, it is suggested that you opt for an individual health policy or take a top-up plan on your employer's health policy for adequate health coverage. 

Wrapping Up! 

As we celebrate Independence Day, remember that real freedom extends beyond our borders. It also includes the right to have access to healthcare and financial protection. However, individuals with complex ailments like diabetes, hypertension, and high blood pressure struggle to find a health insurance plan. To reduce the financial and medical stress of these people with pre-existing diseases, we at Care Health Insurance offer a specially curated health plan, Care Freedom. It offers quality care to people with prolonged conditions without much delay. The plan includes a short waiting period of 2 years for pre-existing diseases and includes benefits like restoration, OPD, annual health check-ups, pre- and post-hospitalisation, domiciliary hospitalisation, and more.

Disclaimer: The above information is for reference purposes only. For more details about the health insurance plans and their benefits please refer to the sales prospectus, policy terms, and conditions.