Mid-Day Explains | 'Your health needs a safety net': Mumbai experts urge 8-10 lakh savings for major illnesses like Cancer and heart disease

Pankaj Sabnani had a fever in May 2023 for more than 21 days but since his condition didn't improve, the Mumbaikar decided to get admitted to a city-based hospital. He narrates, "I got admitted in Kokilaben Hospital under pyrexia of unknown origin for three days after taking advice from two doctors." Armed with health insurance, Sabnani wasn't worried about recovering the cost. However, he was in for a rude shock. "My claim was rejected as the medical team of the insurance company felt that my condition didn't require hospitalisation.

Unsatisfied with the response, Sabnani registered his complaint under the Insurance Regulatory and Development Authority and then Bima Lokpal. "After more than a year, in a recent hearing, the insurance company was asked to pay me the full amount with interest." In the process, the Mumbai-based content strategist got back Rs 1.41 lakh that he had spent during this time. Sabnani is among many who often face challenges with medical insurance not only in navigating the processes but also the claim making it difficult and often exasperating. Additionally, it also poses the challenge that the insurance cover may not always be enough especially in a post-Covid world when treatment costs are always high or getting higher, depending on the type of cancer, heart disease, or treatment.

Saving up for personal health emergencies
After undergoing such an experience, ask the Mumbaikar if he is dissuaded from getting health insurance, but he immediately says that saving up for health insurance is always good and has been his number one priority, especially with ageing parents but believes that there are many challenges while that need to be addressed. He explains, "The sum insured amount can be very tricky. I didn't know what would be enough. I also bought health insurance for my senior citizen parents. Many companies have a co-pay clause when it comes to senior citizens. So, it was a challenge to find the best company with the best plan."

City-based chartered accountant and financial consultant Shaili Shah believes that having a sufficient health insurance policy is important as it always helps to cover up health costs. She explains, "If you have proper sufficient coverage and without any capping, it is the best investment one can make.
However, the health insurance may often not be enough and that is where people need to think more. Even as there are many health insurance providers today, one has to admit that the easiest way to address treatment costs is by saving money from the time that one starts earning. It's also what will help treatment costs, according to Shah. She adds, "Having savings over a period dedicated for health can overcome any additional expenses and safeguard and not dive into other savings impacting other goals."

This is especially true after the Covid-19 pandemic as we know how health emergencies can come at any time not only personally but also to the family. Shah explains, "Considering the rise in the medical cost and cost of medical in general, a lot of times the savings are not sufficient to meet the actual expenses. Hence, having a corpus created for health is important but more over having health insurance first and then saving for any other contingency should be the order followed."

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Cost of cancer and heart treatment
The Mumbaikar is a second-generation finance professional, who is the chief growth officer at Purva Investments, an insurance and investment company in the city. Over the years, she has specialised in health-related financial matters and planning and says that how much a person or the family should save depends on the family's medical history and the sufficiency of health insurance of a family. Shah explains, "Cancer and heart issues are two sicknesses that take up a lot of money. If you do not have sufficient health insurance, then at least 15-20 per cent of your savings should go towards this goal. Overall, it is good to have at least a ready corpus of 8-10 lakhs per person, and for a family of four, they should look at a cumulative amount of 20-25 lakhs."

Shah talks from years of experience and expertise as she breaks it down, "Cancer-related expenses come to about 8-10 lakhs on an average with a basic facility and on the upper end can easily go to 20-25 lakhs depending on the type of cancer, tradesmen hereafter and the hospital and doctor where you are being treated. For heart issues, it would be around 10-15 lakhs on an average and can go on higher end depending on complexity." In fact, she says since women tend to have a longer life expectancy than men, the savings required for health is slightly higher for them.

Dr Meghal J Sanghavi, oncosurgeon, Wockhardt Hospitals Mumbai Central, sheds more light on the cost of treatment for the diseases. With cancer being one of the most dreaded diseases due to its life-threatening nature, Sanghavi says that makes it a semi-emergency situation. He further explains, "As a long-term, debilitating illness, cancer treatment typically spans from 6 to 12 months, requiring a lengthy commitment rather than a one-time surgical fix." The fact that cancer care usually involves multiple modalities, including surgery, chemotherapy, and radiation therapy means that each treatment requires numerous tests to plan effectively assessing patient fitness, tolerating tests, determining dosage, and pinpointing the extent of the disease for accurate radiation targeting. "This extensive testing and the need for various treatments contribute to the high cost of managing cancer. The combination of prolonged treatment duration and multi-modal therapy makes cancer one of the most expensive diseases to treat," he adds.

Even as the recent budget reduced the costs of cancer treatment drugs, the city-based doctor says, "Cancer treatment will remain costly due to its lengthy and multi-cycle nature. Unlike one-time surgeries, such as hernia or bypass procedures, cancer treatment involves multiple doses and cycles, and there is always a risk of recurrence. This necessitates regular follow-ups and numerous investigations, further contributing to the overall expense." Radiation therapy further affects costs, with early-stage cancers potentially avoiding it.

The cost of cancer treatment also depends on the organ, he says, and the complexity of the surgery. For example, breast cancer surgeries may last under two hours, while surgeries for head and neck cancers, which often include reconstruction, he says, can take 10 to 12 hours. "The total cost includes both the duration of the surgery and the hospital stay. Additionally, post-surgery or pre-surgery chemotherapy costs are influenced by the number of cycles needed. Early-stage cancers might require 4 to 6 cycles, while advanced stages could need up to 16 cycles, increasing the cost. The type of chemotherapy drugs also impacts expenses; specialised drugs like targeted therapies or immunotherapies can be more costly due to their limited availability in India," he explains.

The city-based oncosurgeon further says that while most people may think that cancer treatment in India is expensive, it is the duration that comes into effect. He explains, "The overall cost is spread over 6 to 12 months rather than incurred all at once. Costs also vary based on the hospital type, room choice, and specific surgery needs. Consequently, providing an average cost is challenging. Additionally, cancers detected early, such as thyroid or breast cancer, tend to be less expensive to treat compared to cancers detected at later stages, like ovarian or liver cancer, which require more extensive treatment and therefore, higher costs."

When Sabnani got his money back, he makes an important point. He says, "I feel there is a big knowledge gap when it comes to people knowing their rights and whom to approach when they feel the companies are not giving them the right solution. I would urge people to find out the regulatory authority of companies as knowledge is power."

Additionally, Sanghavi provides a ballpark figure of how treatment costs are incurred given the duration. He explains, "In government hospitals radiation, chemotherapy and surgery may range from being free to a few thousand each. In charitable hospitals, it may be around 2-3 lakhs for each modality of surgery and chemotherapy. On the other hand, the treatment in private hospitals will be as per each hospital tariff and room category."

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Role of health insurance
Among many other insurance companies, Upstox recently forayed into health insurance. Kavitha Subramanian, co-founder, Upstox explains, "Currently, the insurance penetration in India stands at just 4.2 per cent, with a considerable portion of the population still being dependent on traditional and agent-driven models to purchase policies. Along with that, there is a lack of awareness, an overload of choices, heavy paperwork and complex jargon involved in the process of buying insurance. Insurance is integral to fostering financial security and ensuring protection from unforeseen circumstances and risks. Yet, people often overlook the idea of buying insurance due to a barrage of misinformation and myths that have persisted for decades."

Through their research, Subramanian says they found that most people opt for one-size-fits-all and that often leads to challenges in selecting the right plan for them. At the same time, they want to encourage younger Indians to consider and start thinking about insurance earlier as that effectively helps them reduce their premium costs.

Subramanian says there are common myths that people have about insurance:

Myth: You need life insurance for as long as you live
One common misconception is that life insurance should cover you until the age of 85 or beyond. However, this isn't ideal, especially if your dependents have become financially independent by that age. In reality, the primary purpose of life insurance is to provide financial support to your dependents in the event of your untimely death.

Myth: Smokers must pay more premiums
While it's true that smoking can increase your premium amounts, there is a silver lining. If you quit smoking and maintain this for over a year, you may be eligible for premiums comparable to those of non-smokers. Insurers often reward healthy lifestyle changes, and quitting smoking is a significant positive change.

Myth: Hiding health issues or smoking will reduce your premium
Some believe that withholding information about health issues or smoking habits can reduce premiums. However, this is a dangerous myth. Every insurance policy has a waiting period after which you become eligible for benefits. If you hide a health issue to lower premiums and the issue intensifies, you won't be able to benefit from your insurance. Full disclosure is essential when applying for insurance to ensure you are fully covered when you need it most.

Myth: If you are young and healthy, insurance Is not a prerequisite
This is a particularly risky misconception. Life is unpredictable, and it is always wise to have financial protection. Insurance acts as a safety net, even for young and healthy individuals, providing crucial support in case of unexpected financial setbacks.

Myth: Your employer's insurance coverage is sufficient
Relying solely on your employer's insurance plan may not be enough. Employer-provided insurance typically offers standard coverage, which might not cover all your needs. Additional personal insurance ensures comprehensive coverage and financial security, even if you change jobs or leave your current employment. Personal policies provide tailored coverage that can better address your unique financial situation and future needs.

Myth: Life insurance is an investment tool
Contrary to popular belief, life insurance is not an investment tool. It serves as a safety net to protect your family and dependents from financial hardship in the event of your death. The primary purpose of life insurance is to provide peace of mind, knowing that your loved ones are financially secure, not to generate returns on investment.

Need for inclusion of fitness in health insurance
Elsewhere, Akshay Verma, co-founder of FITPASS, an Indian platform for fitness and wellness solutions, adds another perspective to the health insurance debate. He says one of the primary challenges with current insurance policies is their reactive nature. He explains, "Most policies are designed to cover expenses after a health issue has occurred, rather than preventing it in the first place. Additionally, there is often a lack of clarity and understanding among policyholders regarding the coverage and benefits of their insurance plans, leading to confusion and dissatisfaction when claims are made."

He explains, "The inclusion of wellness and preventive health benefits in insurance policies is a crucial step towards adopting a more proactive approach to fitness and healthcare. Traditionally, health insurance has focused more on covering treatment costs after an illness strikes. However, with lifestyle-related diseases on the rise, it's imperative to shift the focus from a reactive to a proactive approach. Having wellness benefits encourages individuals to lead a healthier lifestyle, thereby reducing the risk of chronic conditions." This he believes benefits the insured by promoting long-term health but also alleviates the overall burden on healthcare systems.

Collaborating with Insurance Regulatory and Development Authority of India (IRDAI), the latter issued new guidelines on September 4, 2020 permitting health insurers to incorporate fitness activities such as yoga, gym workouts, zumba, pilates, CrossFit, swimming, into health insurance coverage. However, Verma believes there is a still a challenge with this as integrating wellness benefits into existing policies can be complex. "It requires a shift in both the insurer's approach and the insured's mindset. Insurers also face the challenge of developing metrics and systems to accurately assess and reward preventive health activities," he adds.

It is also why he believes that health insurance today should go beyond covering medical expenses and include the following:

Fitness, wellness and preventive care: Coverage for routine check-ups, fitness programmes, and other preventive measures to encourage a healthier lifestyle.

Holistic coverage: Adequate protection for hospitalisation, outpatient care, mental health services, and critical illnesses, ensuring that all aspects of health are covered.

Flexibility and customisation: Options to customise the policy based on the individual's health needs, lifestyle, and preferences.

Transparency and clarity: Clear communication of the terms, conditions, and benefits to avoid any confusion or misunderstanding at the time of claim.

Incentives for healthy behaviour: Rewards or discounts for maintaining a healthy lifestyle, such as participating in fitness activities, following a balanced diet, or regularly monitoring health metrics.