It’s 2016. India has dusted itself off a brief slump in 2014 to get back to a 7% growth rate for yet another consecutive year. The country is rapidly developing, with several world-class companies coming to India with revolutionary products, to grab the attention of 1.26 billion people.

This swift growth has brought about a change in a lot of variables. One of these is healthcare, a sector that is seeing a Compound Annual Growth Rate (CAGR) of 16.6%. As this vertical is treading new and technologically driven territories, the cost of health care, too, is slowly peaking to reach an all-time high.

Amidst all the development, the never-ending debate of health insurance vs. health corpus continues to rage, with each side having its proponents. In this article, we will try to address the issue and come up with a satisfactory answer.

So, here’s an analysis of health insurance, health corpus, and their pros and cons.

What is a Health Insurance?

A health insurance policy is a type of insurance coverage that covers the cost of an insured’s medical expenses. Depending on the type of health insurance policy, the insurer makes direct payment to the service provider or the insured pays the expenses out of their pockets to claim a reimbursement on a later instance.

Advantages:

Nobody ever plans to get sick or hurt. However, when illness strikes, you will need to be financially ready in order to handle the situation. Here are a few advantages of having a health insurance policy.

1. You Get a Daily Hospital Allowance

To begin with, when you are in a hospital, a vast sum of money is spent on food and your family’s commute to the hospital. To take care of this, most health insurance policies offer a daily hospital allowance. You will need to check if it is a per-day cash handout or pre-fixed. Also, you don’t need to hand over any bills to claim these expenses.

2. Recovery Benefit

While some insurers provide only hospitalisation expenses, there are others that offer recovery expenses as well. Known as a recuperating benefit, this particular feature offers you a lump sum amount if you stay at the hospital for a prolonged period of time.

3. Alternative Treatment Benefits

The IRDAI has recently added a guideline wherein insurance providers need to provide insurance for clients who opt for alternative treatments like Ayurveda, Unani, and homeopathy.

4. Tax Benefits

The premium paid for health insurance policies are eligible to get tax benefits under Section 80D of the Income Tax Act.

Disadvantage:

Apart from the fact that you will need to set aside a certain amount for premiums each month, there are no specific disadvantages that come with buying a health insurance policy. There is the case of waiting period, though, which can be avoided if you buy a disease-specific policy.

What Is A Health Corpus?

A health corpus is basically a fund you set aside or break when you are met with an emergency that need medical attention. This could range from you borrowing a loan from a bank to breaking your fixed deposits.

Advantages:

The one real advantage of a health corpus is that you wouldn’t need to go through a waiting period to get treated for some pre-existing illnesses.

Disadvantages:

When you weigh the scales by outlining the advantages and disadvantages of a health corpus, the negative aspects tend to outweigh the positives.

1. It Is a Bad Financial Decision

While breaking your hard-earned savings to pay your medical and surgical bills make sense in the beginning. It starts to seem like a bad financial decision when you look back at it. Imagine you come across a much larger health emergency a few months after the first, and you barely have any savings to dip into.

2. Doesn’t Offer You All The Benefits

Unless you are a multi-millionaire with unlimited funds, you can’t ‘buy’ the benefits offered by a health insurance policy without actually getting one. Every treatment or procedure you get will cost you money and will sooner or later burn a hole in your pocket.

When you weigh the odds, owning a medical insurance policy makes much more sense as opposed to using a health corpus to take care of your medical bills and treatment costs. Besides, all you need to do is pay a small sum as premium each month to receive top-class services from reputed hospitals. Also, if you have any disagreements with your insurance provider, you can use the portability option to find a better one.