The freedom to be the Master of your own hours - isn’t this what we all want? Well, freelancers actually HAVE this! Far off from the 9 to 5 work clock, freelancers enjoy working at their own hours, from their comfort spaces, and for the days that best suit them!
*sigh*
They are truly living the dream!
However, as any dream would have it, everything comes at a price!
Apart from the fact that freelancers are expected to work twice as hard as corporate employees, freelancers pay the price of their freedom over the interrupted flow of income - some days, there is a flood of income, and other days, there’s a drought.
Under such circumstances, any sudden emergencies might pose a financial strain. And when such emergencies are related to medical treatments, they are looking at a long stretch of persistent financial stress that will be eating away their life’s savings and putting them on a financial backfoot for their miscellaneous expenditures.
While it's true that they do not have an employee offering them affordable corporate health insurance plans to meet their medical expenses, this in no way means that they should be missing out on availing of individual health insurance plans for freelancers.
Why do freelancers need Individual Health Insurance?
Health insurance policies are targeted at minimizing the financial strain that might be exerted on an individual due to health treatments. The offered funding shields your savings from vaporizing in an attempt to meet the hospital bills and invoices.
As to why freelancers need to purchase an Individual Health Insurance policy, here’s why -
| Ravi was employed with an organization for 3 years but leaned towards self-employment considering the significant financial boost he could get, the flexible working hours, and the time to spend with his family. So, now he works as a freelancer. Over the period of 2 years working as a freelancer, he makes a significant saving of approximately INR 5 lakhs. Unfortunately, due to certain health issues, he has to visit the doctor. The doctor suggests a minor surgery after a month or so and warns him that he will need to follow up with regular checkups after the surgery is done. |
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| CASE 1: NO HEALTH INSURANCE POLICY | CASE 2: EXISTING HEALTH INSURANCE |
| Ravi is now staring down at an unavoidable financial pitfall that involves pre and post-hospitalization charges and hospitalization bills. The total expenditure is sure to exceed his existing savings of INR 5 lakhs and then some. So, now, he has no savings, no chances of resuming work any time soon, and no source of constant income. |
Ravi reaches out to his insurance provider and informs them of his current medical pandemonium. He undergoes medical treatment (pre and post-hospitalization and surgery). The bill exceeds INR 5 lakhs. He gets reimbursement (in the case of a non-network hospital) or a cashless (network hospital) claim settlement. His saving remains untouched, which helps him meet daily expenses (while he is unable to take up any projects), and he is still left with some savings for his future requirements. |
Such a financial security net in the form of an Individual Health Insurance Policy safeguards your life’s savings during any and all medical emergencies. Apart from this, as a self-employed individual, the health insurance plans bring you a queue of perks -
What are the Benefits of Buying Health Insurance for Self-employed Individuals?
- Your savings are safeguarded
As a self-employed individual, sans any Employee Provident Fund provisions, your savings will be the determiner of your future lifestyle. Under such circumstances, purchasing an Individual Health Insurance policy ensures that the savings are shielded from any major medical happenstances.
Thus, in return for steady small portions of premium payments on an annual basis, you are on the receiving end of substantial funding to meet medical expenses. This ends up saving the lion’s share of your savings.
2. Access to tax savings
Irrespective of the source of your income, you are liable to pay your Income taxes as per your yearly income. However, with health insurance plans, you are looking at a substantial saving on your tax deduction under Section 80D of the Income Tax Act 1961.
3. Financial safeguarding in case of accidents, critical illness, and multiple hospitalizations
Medical emergencies like accidents and diagnosis of critical ailments followed by prolonged treatments over multiple hospitalizations have a way of walking into one’s life without prior notifications. Hence, when you have access to the best health insurance policies for 2023 that offer
- Personal accident coverage from Day 1,
- Coverage for critical illness treatments
- Coverage for pre-existing ailments
-and comes with funding for treatments for lifestyle ailments too. Such coverage is instrumental, considering that these medical emergencies appear out of the blue and often incur massive financial strain on an individual. With such funding in place, you don’t have to worry about dipping into your savings and thus compromising your future investments and planning.
4. Financial protection against medical inflation
Let’s say you sat down and conducted an extremely complicated calculation to set aside a lumpsum amount for your future medical expenses. However, there’s a small problem that will surely pose a significant financial hurdle - MEDICAL INFLATION.
As healthcare services grow efficient and sophisticated, they also continue to get pricey (thanks to cutting-edge medical technologies and their advancements). With this in mind, you are looking at a considerable financial dip, despite the savings that you have set aside.
On the other hand, if you avail of a health insurance plan from the best health insurance providers in India and pair it with a proper safeguard rider (Protector from HDFC, Care Shield from Care, or Safeguard Rider from Max Bupa), you have a triangle of additional perks -
- Inflation shield - where your premium remains unchanged despite economic inflations.
- Consumable coverage - where, during your hospitalization, coverage is offered for the consumables that will be used.
- No-Claim Bonus shield - where if you make a nominal claim (below INR 50,000 in the case of Max Bupa and HDFC Ergo, and less than 25% of the sum insured in the case of Care), your No-claim Bonus is left untouched.
We now have listed out all the perks of availing of an Individual Health Insurance Plan for freelancers and/or self-employed individuals.
However, the elephant in the room remains - with a disrupted flow of income, how do freelancers manage to pay off their insurance premiums?
How can freelancers deal with Health Insurance Premiums?
1. Monthly savings in small SIPs - Opt for SIPs where you can deposit a certain sum of money each month. The amount for each month can vary depending on your monthly financial standing and stability. Prior to paying off the premium, this can be withdrawn and used to pay off the premium.
You can either calculate the exact premium to be paid off and accumulate the sum or use it as a savings account and deposit as much as possible. The residual sum (after premium payment) can be used as next year’s premium starter.
2. 2-year or 3-year premium upfront payments - Keeping in mind the chances of the interrupted flow of cash among potential policyholders, insurers extend an olive branch - you have the provision to pay the premium for 2 or 3 years upfront. This comes in handy in the case, as a freelancer, you land upon a big project and hence a significant cash flow. Additionally, since you will be paying off the premium for the next 2 or 3 years in advance, there are added perks -
- Protection against inflation
- Discount on the total premium to be paid. (say, the premium on your chosen health insurance plan is INR 15,000/year. If you are paying off 3 years of premium upfront, instead of the expected INR 45,000, you might be paying INR 42,000- 40,000. The offered discount obviously depends on the approached insurer, and the plan opted for).
What are the Common Myths about Health Insurance?
When our expert insurance advisors are approached by potential self-employed policyholders, there are a few questions that they face. A majority of these are some common myths and rumours about health insurance plans that raise doubt in their minds as to if the policies will at all be a good choice for them.
Here are the truths about such myths proving why we suggest health insurance plans for freelancers -
#1: Health insurances are pricey
TRUTH: The price of health insurance premiums is quite affordable. The only cases where it gets expensive are-
- If you are over 60 years and avail of a senior citizen health insurance plan.
- If you have a pre-existing critical illness like cancer that requires high-end treatments (very few insurers provide coverage for this).
We say choose the best health insurance covers that cater to your medical requirements as advised by our experts.
#2: Insurance plans require you to pay a certain % of the bill
TRUTH: Absolutely not! With our chosen list of health insurance policies, no copayments are required. Your entire hospital bill is paid off by your insurer by either -
- Cashless mode (partner hospital)
- Reimbursement mode (non-network hospital)
#3: 24-hour hospitalization is mandatory for insurance claims
TRUTH: Health insurance coverages from industry-best insurers offer daycare treatment coverage features. This is targeted at offering funds for treatments of ailments that require less than 24 hours of hospitalization.
#4: Young people in their 20s don’t really need health insurance plans
TRUTH: Here’s why the 20s is actually the best time to avail of a health insurance plan -
- As you grow older, you pose significant risks of higher payouts for the insurers. Hence, they demand higher premiums and loading charges to offer ample coverage.
- The 20s is when an impulsive lifestyle is the most prevalent. With accident coverage from day 1, you make a financially responsible decision.
- When you avail of a health insurance policy as early as in your 20s, there are fewer chances of you making a claim. Thus you build on your No-Claim bonus amount. With the best health insurance policies, this amount boosts your covearge bandwidth by about 200%. So, while you continue with a low premium, you have access to a huge coverage.
- Availing of the policy in the early years means you will be completing your waiting period to access the funding. Thus, the coverage will be accessible when you actually need it.
#5: Your savings are better than health insurance when you are a freelancer
TRUTH: Well, the first thing is your savings have other purposes to serve - purchase a house, pay off your children’s education requirements, run the household, serve as a retirement fund, and more.
The second thing is when you invest your savings into meeting healthcare invoices, you are about to witness a big bite being taken off the amount. This amount will take you a lifetime to re-accumulate (as you well know).
On the other hand, if you avail of a health insurance plan, you will be paying small amounts as premiums and gaining access to massive funding that can be replenished each year over a renewal or immediately if your plan offers restoration benefits.
#6: Health insurance claim settlements are complicated & time-consuming
TRUTH: Whether your insurer banks on a Third Party Administrator (TPA) or deals with the claim settlement process with their in-house team, when it comes to the best insurance providers, the claim settlement process is smooth and convenient. Here’s how it happens -
CASE I: CASHLESS
Inform the insurer about your medical condition prior to being hospitalized. The insurance provider will reach out to the partner hospital where you are undergoing treatment and request invoices and medical documents. By discharge, the bills will be cleared in full (as specified in the policy underwriting) by the insurer.
CASE II: REIMBURSEMENT
Inform the insurer about the medical procedure that you will be undergoing in the non-network hospital. During discharge, you pay off the bill from your pocket. Raise a claim with the provider while keeping the hospital invoices and medical procedure documents handy. Your insurer will reach out to you for the documents and cross-check the claim raised. The claimed amount is then disbursed to your account.
How should freelancers choose their health insurance policy?
When choosing a health insurance policy, opt for a plan that offers you the following benefits -
- No copayment
- High No-Claim Bonus
- No disease-wise sub-limits
- No room rent restrictions
- Pre- and post-hospitalization coverage
- Daycare treatment coverage
- Domiciliary treatment coverage
- Minimum waiting period on pre-existing ailments
- Restoration benefits
- High Claim Settlement Ratio (CSR)
You can also schedule a call with our insurance experts to know the best health insurance policy that caters to your customised requirements.
Frequently Asked Questions
I'm 20-something. Don't really have any major health issues now. Should I really be thinking about getting health insurance at this point?
Yes, you should. As a 20-year-old, availing of a health insurance policy comes with added perks -
- Low premium as you are a low-risk policyholder for insurers.
- Chances to accumulate a No-Claim Bonus since there are low chances of you raising a claim in your 20s.
- Exhausting the waiting period required to access the insurance coverage.
- Access to personal accident covearge since day 1 of your insurance.
My monthly income is less than INR 50,000. Paying a premium for my insurance is something I can't afford right now. Can I wait till my monthly income is INR 100K / month?
Insurance is not exactly a choice; it’s a lifestyle necessity. Additionally, yearly premiums only take up a nominal percentage of your annual CTC. So, the best way forward would be to either set aside a monthly sum into a SIP or a piggy bank. This would help you during the premium payment.
Moreover, the more you delay availing of a health insurance policy, the chances are higher that you will be offered a plan that demands a high premium. This will definitely be financially taxing.
What happens if I have a bad year and feel like skipping a premium? Is that allowed?
No, it isn’t. Insurance providers and IRDAI are absolutely strict about this. Continued premium payment is crucial to have an active health insurance premium. If you skip a year, you lose out on all the benefits accumulated since the time you purchased the policy.
You can always save in advance to pay off your premium. Say you had a good year with great financial gains; reach out to your insurer and pay up your premium on a 2 or 3-year basis. This will ensure that you have a discount on the premium paid, and your premium will also be shielded against any economic inflations.
How do I prove that I am self-employed when purchasing health insurance in India?
You do not need to prove your employment status to an insurance provider. Individuals who are employed, self-employed, or unemployed can all avail of a policy. All that they need to do is pay the yearly premium.
Is there any obligation by someone hiring freelancers / contractual workers to tell them about insurance options?
No, there are no obligations by someone hiring freelancers / contractual workers to tell them about insurance options. However, health insurance literacy is important. This is exactly why a majority of organizations across the world now offer corporate health insurance policies. Freelancers, however, do not have this privilege.
Can I save on taxes by purchasing health insurance as a self-employed individual in India?
Yes, you can. Under Sections 80D and 80C of the Income Tax Act, you will be able to save considerably on the health insurance premiums paid annually. Please note that there are old and new tax regimes for the filing of your taxes. To know more about this, visit our blog, Section 80D. You can also find a simple tool there that will help you calculate your tax benefits.
I invest in stocks and mutual funds. If I invest really well over the next 20 years, won't that give me better returns than an insurance premium? Isn't that enough to cover my future health scares?
Stocks and mutual funds are investments, while health insurance plans are protective healthcare initiatives. Unfortunately, they aren’t interchangeable in terms of their usage and targeted requirements. While, for stocks and mutual funds, you invest and wait for your assets to grow, they will not really be effective in case of an urgent medical requirement.
Can I purchase health insurance for my family members as a self-employed artist in India?
Yes, you can. Health insurance policyholders can be employed, self-employed, or unemployed. And they can also purchase health insurance plans for their family or buy a family floater health insurance plan where he/she is included.
But there are so many policies out there! How do I decide what's best for me? How can I trust that the policy I take will hold up during the claim?
While choosing a health insurance plan for yourself, it is crucial that you consider one that offers - no copayment, no room rent restrictions, no disease-wise sub-limits, unlimited restoration benefits, pre and post-hospitalization coverage, daycare treatment facility, domiciliary treatment coverage, and high No-claim Bonus. As for the insurance provider, make sure to opt for one that has a high Claim Settlement Ratio and has been in the market for a long time.
This said when it comes to making such a crucial financial decision that would later influence the quality of healthcare services that you avail, it is best to approach the experts in the field. You can always reach out to our unbiased insurance advisors, who will help you with a health insurance plan that is customised as per your financial and medical requirements.
Are there any insurance providers in India that offer health insurance policies specifically tailored to the needs of self-employed individuals like myself?
The health insurance requirements for employed, unemployed, and self-employed are similar. Thus, there are no specific plans that are tailored to fit the employment of a potential policyholder. Insurance providers also do not factor in the employment status when offering a policy.
However, if you have some specific medical requirements in mind, you can request your expert insurance advisors to factor that in, while suggesting the best health insurance plan for you.