Once you retire from work, your corporate health insurance will cease to exist. So, it’s a no-brainer that in retirement, you need personal health insurance to cover the risk of hospitalisation expenses.

But should you wait till retirement to purchase health insurance?

I recently met a relative who is 55 and will retire in the next 4-5 years. He does not have health insurance of his own but is currently covered under his employer’s group health insurance.

He asked whether he should wait more and purchase a policy closer to retirement, or should do it now.

Get it as soon as possible. Do not wait anymore or till retirement.

Many employees think that employer-provided medical coverage is sufficient as long as they are working. But that is not fully correct. Employer health insurance alone is not enough. It is good to have and if you have to make a claim, you should first do it via your employer’s coverage. But still, it makes sense to have one of your own as well.

Coming back to the question about not waiting till retirement to purchase one.

Having health insurance is crucial at all times. But it becomes increasingly more important as your retirement approaches. And the reason is that the chances of developing medical issues increase with age and hence, you need large enough insurance coverage so that your savings are not exhausted in meeting hospitalisation bills.

One big reason for those nearing retirement to purchase health insurance soon is that you never know whether in a few years' time, when you decide to purchase one, and you have some new health issues, then the insurer may not even be willing to cover you.

Or you may have a pre-existing condition, which will come under the waiting period clause. So if you purchase a policy a few years before retirement, then you can easily see through the waiting period as the corporate cover is still there till you are working. Once you retire, your personal health insurance will be free of any waiting periods for pre-existing conditions and can be used (if need be) to cover such conditions at a later stage of your life.

So better to buy insurance earlier when you are comparatively younger and more importantly, healthier. There will then also be no hassles in terms of renewability.

It also allows you to build your claim-free track record with the insurance company. That also helps if you have a years-old relationship with the insurance company when it comes to claim settlements.

There is another reason to purchase a cover as soon as you can if you are in your late 40s or your 50s. Quite often the employer-provided coverages are small at just Rs 3-5 lakh. Sums like these are definitely not enough when you look at the rising cost of medical expenses. So, while everybody’s right coverage amount will be different, it still makes sense to have a coverage of around at least Rs 15-20 lakh. If your corporate cover is less, then get yourself one on your own, irrespective of whether you are nearing retirement or not.

What more should those nearing retirement do?

If possible, they should have a separate medical contingency fund as well.

With an increase in age, it’s never just about hospitalisation expenses. Hospitalisation is a low probability event. Instead, more probable are the regular, on-going healthcare expenses that old people need to spend money on. The cost of medicines, diagnostics and regular consultations for lifestyle and chronic diseases (like diabetes, thyroid, etc) in itself can be a lot. And the problem is health insurance does not cover these out-of-hospital expenses. For such scenarios having a medical contingency fund is recommended. It also acts as a buffer to dip into in case the hospitalisation bills exceed your health insurance coverage.