How Indians are preparing for medical emergencies since COVID?

The Coronavirus has been unprecedented in countless ways, impacting every aspect of our lives. One of the most unfortunate yet inevitable of these is our ability to afford medical expenses. Most of the country was both physically and financially unprepared for the consequences of COVID, which included massive debt due to the sheer number of medical bills. According to media reports, hospitalisation costs ran up to lakhs of rupees, with charges for tests, an ambulance, medicines, and an ICU bed mounting each day.

This problem was made worse by the tragic fact that a majority of Indians don't have health insurance. Making you liable for shouldering exorbitant expenses out of one's own pocket and not being insured can severely impact your savings and even push you towards debt. With the pandemic displaying our lack of preparedness in terms of health-related finances, we have had to face a harsh reality and become more aware of the role our savings play during emergencies.

Here are some ways in which Indians have responded to financial setbacks due to the pandemic:

1. Setting Up Emergency Funds

Medical emergencies always show up unannounced. While you can't plan for every single one of them, you can take some steps to increase your chances of coping with the situation without much outside help. One of them involves setting up an emergency fund. This means saving money each month to put into a fund reserved for rainy days such as a medical crisis or an unforeseen expense. It is advisable it should be held in a liquid and easy-to-access savings account.

According to financial experts, this fund should cover at least 3 to 6 months of expenses. That way, you don't have to dip into savings or go into debt. Building an emergency fund is a challenging endeavour that requires some discipline on your part. But for a future without financial anxiety, it's an essential step

2. Taking Advantage of Personal Loans

Contrary to some people's belief, there are several scenarios when it might be necessary to take a personal loan. Medical emergencies are one of those times. Personal loans can be an excellent option when you need money at a moment's notice as the loan processing is quite speedy, and there's minimal documentation required. Some institutions even offer personal loans at lower interest rates than others. Not only will you have to pay much less, but you will also receive the amount in no time, which bodes well for situations that mandate hospitalisation or expensive tests. 

Personal loans are also a clever way to improve your credit score. You can take a loan that's easy to repay and fulfil your obligation on or before the deadline. This will establish you as a credible borrower and help you secure a bigger loan in the future. In fact, IDFC FIRST Bank Personal Loans provides you loans with a competitive interest of 10.49% to assist you in times of emergencies.  

3. Breaking fixed deposits

This is one of the less favourable methods that Indians have had to adopt to deal with the aftermath of COVID-19. While most financial experts would agree that breaking an FD prematurely is not a good idea, some emergencies leave us with no choice. As you have used your fixed deposit to achieve short-term goals, it is okay to use those funds when the need arises in times of crisis. Your bank will pay you a lower interest rate after the FD is broken and charge you an early withdrawal penalty that can range from 0.5% to 1%.

However, once your expenses are taken care of, you can find a reinvestment option that gives you higher returns or start a new FD if you want to err on the side of caution. Fixed deposits are a preferred investment option among Indians because of their guaranteed returns, flexible tenures, and minimum risk.

4. Buying health insurance

One of the most significant issues contributing to our inability to meet medical expenses without loans was not having health insurance. Those who purchased COVID-19 insurance before contracting the virus could save lakhs in lump-sum hospitalisation and other costs. In general, owning a comprehensive health insurance cover helps you stay prepared for emergencies while qualifying you for high-quality treatment options. Health insurance is also necessary for keeping your loved ones safe and stress-free, knowing that they will be taken care of if there is a medical emergency.

These days, buying health insurance is easier than ever. You can start by comparing various plans online and determine how much premium you can afford to pay by using an insurance calculator. If you narrow down on anyone policy, you can customise it with riders and make sure it covers you adequately. Making claims for health insurance is also a straightforward process with few steps.

Being aware of our health finances and preparing for emergencies is the need of the hour. With reports of economic distress pouring in from every corner of the country, it's time to start investing in your health by setting up an emergency fund and ensuring you are covered by insurance. While taking personal loans and breaking FDs are viable options during a crisis, having the right amount of insurance might keep you from having to fall back on such alternatives. It's more important than ever to be prepared with state ministries gearing up for the third wave of COVID.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.