Importance of health insurance in today’s uncertain times

Recent Covid-19 pandemic, flooding disasters lead to rise in demand for insurance products

KARACHI:

Our health is undoubtedly our greatest asset! However, at times access to the things that contribute to a better quality of life can be challenging for most of us. Moreover, access to even basic healthcare is an issue for particular segments of society.

Pakistan is a developing nation economically but its population is growing at an average annual rate of 1.9% which is almost double the average global population growth rate.

On top of that, over 7% of the population is over the age of 60, which gives rise to an increasing need for medical care for age-related health issues. Also, given that the average woman in the country gives birth to nearly 3.6 children, there is also a significant demand for healthcare services related to pregnancy and childbirth.

Pakistan’s diverse demographic profile offers immense potential for insurance products due to the significant size of its Gen Z segment, comprising 60-65% of its populace, where the majority of individuals are under the age of 30.

This younger lot focuses on maintaining a healthy and secure lifestyle. As such, this segment requires wider access to modern infrastructure like fitness centres to sustain this lifestyle till they get to 60.

Similarly, they need awareness for accepting life insurance products as integral parts of their lives so that when the time comes, they have a support system that eases their worries.

Since a significant chunk of Pakistan’s population is young, therefore it is essential to understand how health insurance works and why it has become a crucial aspect from the early stages of life.

Insurance generally works on the principle of risk sharing, where individuals pay premiums to a service provider in return for providing them financial coverage in case of medical emergencies including hospitalisation, surgical, and outpatient coverage, alleviating the burden of medical expenses from them.

Over time, these products hedge risks by offering essential financial assistance in cases of untoward mishaps.

The recent Covid-19 pandemic and flooding disasters have led to a significant increase in demand for insurance products. As a result, the overall insurance industry has experienced a 17% growth in premiums over the past year.

Insurance can be a profitable investment over the long term, but it’s important to manage expectations and understand that it may not yield significant results in the short term.

While some people may perceive insurance as a way to double their investment within five years, this is not always a realistic expectation. By taking a more realistic and long-term approach to insurance, investors can benefit from steady growth and potentially significant returns over time.

To avoid confusion during the insurance coverage period, it is vital to read the coverage policies thoroughly and gain a complete understanding of the terms and conditions.

Often, customers tend to quickly go through the documentation and rely on verbal explanations from insurance sales representatives, which can lead to misunderstandings.

When considering health insurance options, it is important to carefully compare both the costs and coverage of each plan. This includes factors such as premiums, benefits, access to healthcare providers, access to emergency care, out-of-pocket expenses and your limitations.

In case your health expenditures are borne by the company you work for, and your employer only offers one health plan option, it is important to understand your coverage.

To attain thorough knowledge about the product being purchased and avoid potential risks of counterfeit insurance or dissatisfaction, it is essential to make direct contact with the appropriate representatives at commercial banks or registered offices of insurance companies.

This will allow clarification of any doubts or questions that you may have and ensure that you are fully aware of the coverage and benefits that the policy offers, as well as what your obligations and risks are.

Securing a suitable life insurance programme at a young age is crucial in obtaining adequate coverage with affordable premiums. As individuals age, the likelihood of developing critical illnesses increases, resulting in higher premiums or potential denial of coverage.

The writer is a finance professional with relevant work experience in the fields of insurance and banking. She avidly researches and writes about various challenges and opportunities in the financial space

 

 

Published in The Express Tribune, May 1^st, 2023.

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