Nowadays most people invest their money into different areas to get it to grow. The most common investment areas include stocks, mutual funds, real estate, and fixed deposits. All are very important components of a sound financial plan, but one very often overlooked and vital investment is health insurance. It should therefore form one of the top priorities in wealth creation, which one should do after securing the well-being of himself/herself and his/her family in the event of medical emergencies.
Health insurance is just not a policy; it is, rather, financial safety for being protected from medical costs arising in moments one cannot anticipate. According to trends, increasing healthcare costs and lifestyle-related diseases only emphasize the fact that health insurance has to be an essential part of the financial plan. Let’s take a look at why health insurance has to be the first investment followed by other financial avenues.
Table of Contents
Why Health Insurance Should Be Your First Investment
1. Protection Against Medical Inflation
Healthcare costs are growing outrageously. Hospitalization alone would take out most of the savings unless you have health insurance coverage. Medical inflation often exceeds general inflation in most countries. What took an arm and a leg years ago will today take an arm and a leg and more. A good health insurance plan investment will ensure you never have to compromise on your medical care.
2. Protecting Your Savings
A good financial plan is wealth creation and establishment of financial security. It can destroy in days, however, it may take an entire year’s worth of savings. Instead of spending your emergency fund or selling your investments, a health insurance policy helps you manage medical costs pretty effectively.
3. All-inclusive Coverage for All Medical Requirements
Who doesn’t like an all-in-one solution? The same goes for health insurance policies nowadays. They cover almost all expenses related to hospitalization. This generally includes hospitalization expenses, pre- and post-hospitalization costs, surgery, diagnostic tests, critical illness and daycare procedures. A few of them also expand to maternity, mental health, Ayurveda & Homeopathy areas.
4. Tax Benefits
Having Tax benefits comes as an added advantage with health insurance plans. They provide deductions under Section 80D of the Income Tax Act. One can avail these benefits for premiums paid for himself, spouse, children and parents. This does not only reduce taxable income but also rewards responsible financial planning.
5. Employer Coverage Isn’t Enough
Most people assume that health insurance provided by employers is sufficient. However, Corporate health insurance plans do not cover all the medical expenses. They also end when a person leaves his job. Independent health insurance provides continuous coverage with changes in jobs or retirement. One should take additional or top-up coverage in addition to his employer-sponsored coverage.
Types of Health Insurance Plans
Knowing the different types of health insurance plans will help you make the right choice that suits your needs:
1. Individual Health Insurance
This plan is for one individual. This is ideal for individuals who require personal financial security against medical emergencies.
2. Family Floater Health Insurance
A floater plan for a family provides cover for the entire family under one sum insured. Generally, this is a cost-effective option for families where they don’t need to buy separate plans for each person in a family. The medical expenses of all insured members are covered under one umbrella.
3. Critical Illness Insurance
The critical illness policies are special ones. They dedicatedly cover life-threatening diseases such as cancer, heart attack, kidney failure, and stroke. The plans give a lump-sum amount on diagnosis of the critical illness which can be utilized while the insured person undergoes treatments for critical disease.
4. Senior Citizen Health Insurance
These health plans target the above 60 years old. The elderly health plans include better coverage towards hospitalization, critical illness and pre-existing medical conditions with minimum waiting periods.
5. Group Health Insurance
Employers offer group health insurance as an employee benefit. Although it is helpful, it is often inadequate and not an exclusive source of health insurance.
Types of Investment and Their Function in Financial Planning
After acquiring health insurance, you can consider wealth-building investments. The most common types of investments include:
1. Stock Market Investments
Investments in equities enable people to purchase company shares and get value appreciation besides generating dividends. Stocks, however, are volatile and therefore need careful research and risk capacity.
2. Mutual Funds
Mutual funds create a pool of funds from different investors and invest it combinedly in various portfolios. A team of experienced professionals manage these investments under a wide array of equity, debt, and hybrid funds. This way it matches every type of risk-taking capability of investors.
3. Fixed Deposits (FDs)
If you want a risk-free investment and also regular fixed growth of your funds, Fixed deposits comes to help. It provides an assured return on the deposit amount. Conservative investors should use it when looking for fixed returns and having minimal market exposure.
4. Real Estate
Long-term capital through property value and rental return, though involving much money in liquid assets as well.
5. Retirement Plans
The proper retirement planning and provision help him stay independent for life. Old-age pensions and annuity besides PFs serve this purpose well.
6. Gold and Commodities
Gold is a hedge against inflation and economic uncertainty. Other commodities such as silver and oil also provide diversification in an investment portfolio.
Why Health Insurance Comes First
While all the investment options help to enhance financial well-being, health insurance has to be the first. Here’s why:
- Immediate Protection: Health emergencies are unpredictable. While other investments grow over time, health insurance offers instant financial protection.
- Preserve the Wealth: An uneventful medical emergency, without health insurance, may mean that you must liquidate savings or borrow and thereby sidetrack long-term financial goals.
- Peace of Mind: Financial planning is not a means of gaining wealth but attaining financial security. A health insurance plan enables you and your loved ones to get the very best medical treatment without any distress in the household budget.
- It encourages disciplined investment. Once health insurance covers your health, you can invest in other financial instruments without the fear of medical emergencies wiping your savings.
Conclusion
Health insurance should be at the core of any financial planning. It protects against medical emergencies, protects savings, provides tax benefits, and gives peace of mind. Investments in stocks, mutual funds, and real estate are used for building wealth, but it should happen only after securing yourself and your family with a strong health insurance plan.
You put a very strong foundation under your future because you’ve made health insurance your first financial investment. It’s about protection before any wealth creation so that your financial journey is more resilient in the face of an unexpected medical crisis.
