It's no coincidence that four of the six letters in HEALTH are HEAL and you need to keep in mind that your health is more important than the test, the interview, the lunch date, the meeting, the family dinner and the grocery run – Take care of yourself. Health emergencies often come unannounced. Besides accidents, there has also been a rising incidence of diseases like hypertension, diabetes, cancer and cardiac episodes even among people in their 20s & 30s. In such a scenario, money crunch can add to stress and hamper healing. So what's the solution— besides making healthier lifestyle choices, plan a health cover that will see you through a bad situation safely. Start as early as you can, with as little as you're able to afford, as being young gives one the advantage of compounding benefits. The earlier you start, the better the benefits. But savings also require proper planning. Setting away a specific portion of your monthly salary is good to start with, but it's not the only thing you need to do.
I would try and draw up a few key points for you to keep in mind while planning for a health emergency fund.
First and the foremost, you need to learn to save. The idea is not to stop having fun, but to set a cap on spending now so that you're more secure later. With increased disposable income at hand, the youth is oriented towards spending it all. A focussed approach for building a pool for any contingencies should be the top priority. One has to start thinking of such savings right from the beginning, because the benefits are much more than the cost. Cutting down the extra expenses will do you more good than harm.
Work out, eat well, be patient and your body will reward you. In simpler terms, a man's health can be judged by which he takes two at a time – pills or stairs! Medical expenses are as important as your groceries, power bills and all other must-spends. Ideally, you should have three to six months of your monthly income as emergency cash balance or a liquid fund deposit of that amount, in case you land up in a hospital without cashless cover. Start with keeping aside a certain amount the moment your salary gets credited every month. Put this amount in a separate savings account or set a recurring scheme in place. With the latter, the money gets deducted directly from your saving account and is beyond your reach for random expenses. This amount can come handy any time of the year for basic health issues or unexpected medical bills.
Good health and good sense are two of life's greatest blessings and it's always good to have health insurance, but even better to create an emergency corpus. There may be times when the health insurance may not work. Invest in a liquid fund and as you build the corpus, you can move to short-term funds or even long-term investments. Good health is merely the slowest possible rate at which one can die and as such it is recommended that you need to get insured. Having a separate savings account is the first step to building a health fund but in the long term, a proper health insurance plan is a must. Health and life insurance are the building blocks of financial planning, together with liquid funds for contingencies. Also, you ought to get an accident cover for a nominal amount. You need to find the right kind of health insurance for your requirements. Your financial advisor can help you check the claim settlement ratio of an insurance company. While choosing an insurance policy, pick a company that is reputed for settling claims smoothly and on time. These days, most employers provide medical insurance, as well. Keep track of how much coverage your company is offering you. But relying solely on your company's insurance policy is not a good idea. It's best to have your own cover.
Buying health insurance is like fixing a leak in your roof, the longer you wait, the more expensive it gets. All of us believe that, family comes first and every family member must have medical coverage, preferably with cashless facility. The age of an individual is also important when zeroing in on a plan. Chances are your parents already have their insurance in place. But, in case, they don't, you need to talk to them and sketch a secure plan for the entire family. Similarly, if you are married and have kids, go for a secure family plan after considering the cover that both you and your spouse prefer. Plan and save together so the pressure isn't just on one person and either of you can use your savings in case of an emergency.
Fitness is the key and another easy way to avoid untoward health incidents is to stay up-to-date with your medical check-ups. Schedule one every six months to keep track of your metabolism, blood sugar levels, blood pressure, etc. In case there's a reason for concern in the reports, you can start treatment without any delay or check with your physician for an immediate plan of action. Basic idea is to recover from any illness or medical exigency without having to worry financially and if you're still looking for that one person who will change your life, take a look in the mirror.
(Ifthikar Bashir is a freelance Financial Advisor)