Dear Mr.Anil, I m 43 and married with two kids 9 and 3. Both of us are in private jobs. We have health insurance covering family already as 5 LPA and with NCB it cover till 10 LPA now. We wish to keep aside another 20 Lac ,citing medical costs these days and we plan to have 30 lacs cover . From incomes i am in position to set aside 20 lac in MFs for unforeseen medical treatment requirement of future, while same time i have two more options ,option 2: to buy another health insurance of 10 LPA and with NCB(hopefully) the cover goes to 20 LPA in future .Option 3 is to increase the cover on our existing policy to 15 LPA. Kindly suggest which among the three option is most prudent call.

Ans: Hi Pradeep, yours is a legit concern. It would be best if you take advice from a professional person or company – having the necessary qualifications -- after discussing your issue with them.

Insurance is each to its own. Depending on your concerns and requirements a professional service provider will be able to give you the best advice, whether to tweak policy amount or switch to top up.

Ans: Taking the right health insurance coverage is crucial, especially given the rising medical costs. With your current family floater policy of Rs. 22.5 lakhs and considering your wife's family history, it’s essential to evaluate your needs. Here’s a comprehensive guide to help you decide on additional coverage and whether a critical illness or cancer policy is necessary.

Current Health Insurance Coverage
Your existing policy has served you well, accumulating a bonus of Rs. 7.5 lakhs, increasing your coverage to Rs. 22.5 lakhs. This is a good base, especially since you’ve prioritized a public sector insurer due to concerns over private insurers.

Public sector insurers have a reputation for reliability and fewer complaints. Your choice is wise, given your specific concerns.

Assessing Your Coverage Needs
Health insurance needs can vary based on several factors, including age, family medical history, and lifestyle. Considering these factors, let's analyze your situation:

Age: At 49 and 44, you and your wife are approaching an age where medical issues become more common. Your daughter, at 16, still has a relatively low risk.

Medical History: Your wife’s family history of heart problems and cancer is a significant factor. This history increases the likelihood of needing substantial medical care in the future.

Rising Medical Costs: Medical inflation in India is high. Treatments for severe illnesses can easily exceed Rs. 20 lakhs, especially in metropolitan areas.

Given these points, it might be wise to consider additional coverage. A coverage of Rs. 30-50 lakhs could be more appropriate.

Evaluating the Need for Additional Coverage
To determine if you need more coverage, consider these aspects:

Hospitalization Costs: Major treatments and surgeries can be very expensive. Even with Rs. 22.5 lakhs coverage, a few hospitalizations could exhaust your policy limits quickly.

Treatment Advances: Medical technology is advancing, leading to higher costs for newer treatments and procedures.

Geographical Location: If you live in a metro city, medical costs are generally higher compared to smaller towns.

A top-up or super top-up policy could be a cost-effective way to increase your coverage without significantly increasing premiums. These policies kick in after a certain threshold is met, offering higher coverage at a lower cost.

Critical Illness and Cancer Policies
Given your wife's family history, a critical illness policy or a specific cancer policy could be beneficial. These policies provide a lump-sum payment on diagnosis of specific illnesses, which can be used for treatment, recovery, or even daily expenses.

Critical Illness Policy: Covers a range of severe illnesses like heart attack, stroke, kidney failure, and more. It provides financial support at a crucial time, helping to cover costs that may not be included in a regular health policy.

Cancer Policy: Specifically designed for cancer treatment. Cancer treatment can be prolonged and expensive. This policy ensures that financial constraints do not hinder the treatment process.

Benefits of Critical Illness Policies
Lump-Sum Payment: On diagnosis, you receive a lump-sum amount which can be used for any purpose, giving you flexibility.

Wide Coverage: Covers several major illnesses which can be financially draining if not insured.

Peace of Mind: Knowing you have coverage for major illnesses can reduce stress and allow you to focus on recovery.

Benefits of Cancer Policies
Specialized Coverage: Tailored specifically for cancer, ensuring comprehensive coverage for all stages of the disease.

Enhanced Support: Provides financial support for expensive treatments, ensuring quality care without worrying about costs.

Flexibility: The payout can be used for treatment or other related expenses, providing financial flexibility during tough times.

Premium Considerations
Health insurance premiums do rise with age and medical inflation. To manage premium costs while ensuring adequate coverage, consider the following strategies:

Top-Up Plans: As mentioned, these can provide high coverage at lower premiums compared to base policies.

Family Floater Plans: These can sometimes be more economical than individual plans, especially when covering multiple family members.

Regular Review: Periodically review and adjust your coverage to match your current needs and financial situation.

Practical Steps to Enhance Coverage
Assess Your Needs Regularly: Health needs change over time. Regularly assess your insurance coverage to ensure it aligns with your current and future needs.

Consider Top-Up Policies: If you find your current coverage inadequate, a top-up policy can provide additional coverage at a reasonable cost.

Evaluate Critical Illness and Cancer Policies: Given your wife's family history, these policies can provide financial security in case of serious illnesses.

Consult a Certified Financial Planner: They can provide personalized advice, ensuring your insurance strategy fits within your broader financial plan.


You’ve taken commendable steps to ensure your family's health and financial security. Your proactive approach to health insurance is admirable. It’s evident that you care deeply about your family's well-being, and you're making informed decisions to protect them.

Final Insights
Ensuring adequate health insurance coverage is crucial, especially with rising medical costs and potential health risks. Your current coverage of Rs. 22.5 lakhs is a good start, but considering additional coverage could provide more security.

A top-up policy could enhance your coverage cost-effectively. Given your wife's family history, a critical illness or cancer policy could offer additional peace of mind and financial support.

Health insurance is not just about covering hospital bills; it's about securing your financial future against unforeseen medical expenses. By carefully evaluating your needs and considering additional coverage options, you can ensure comprehensive protection for your family.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Ans: You are thinking with clarity and foresight. That’s truly a smart financial instinct.
It’s good that you already have a health cover of Rs 10 lakh with NCB benefit.
Also, planning an extra Rs 20 lakh to meet future medical costs shows great foresight.
This balanced approach deserves appreciation.

Let us assess all three options from every angle.
We’ll look at risk, liquidity, long-term sustainability, and cost-efficiency.

» Understand the Need First

– You are 43, with two young children.

– Lifestyle diseases, critical illnesses, and hospital costs will only grow faster.

– Private sector jobs may not always offer lifelong employer coverage.

– Medical emergencies may come at any time, without warning.

– So, building a personal health safety net is not optional anymore.

– You are right in aiming for Rs 30 lakh health coverage.

– But we must balance it between insurance and investment.

» Evaluate Option 1: Invest Rs 20 lakh in Mutual Funds

– This option gives you full control over the money.

– You can withdraw for medical or other emergencies.

– It is not locked or restricted by insurance terms.

– If invested in actively managed funds through MFD + CFP, it grows better.

– You will have liquidity and potential higher returns.

– But, market returns are not guaranteed or fixed.

– Also, treatment cost can arise before corpus grows sufficiently.

– Another risk: If the fund value dips during a health emergency.

– That may create panic, and you may withdraw at loss.

– Equity MFs are good long-term options but need time.

– This is not suitable to replace pure health insurance.

– However, this corpus can be a second line of defence.

– It works well only along with a strong base health cover.

» Evaluate Option 2: Buy a New Policy of Rs 10 lakh

– New standalone cover gives additional layer of insurance.

– If NCB is maintained, it may grow to Rs 20 lakh over years.

– This option protects you against sudden high-cost treatment.

– New policy can be kept separate from old policy.

– In case one insurer rejects a claim, second can help.

– But new policy means additional premium every year.

– Also, waiting periods start fresh for this new policy.

– Pre-existing conditions will be covered only after a few years.

– Cashless network may differ from your current insurer.

– So, coordination during claims may get more complex.

– You must also manage two policies with two sets of documents.

– This may get harder as you grow older.

» Evaluate Option 3: Increase Sum Insured on Existing Policy to Rs 15 lakh

– Enhancing existing cover is simpler and seamless.

– Same insurer, same policy number, same network hospitals.

– Only one premium to track and renew.

– No new waiting period, no duplication.

– NCB will also work better on higher sum insured.

– Over few years, it may reach Rs 25–30 lakh via NCB.

– Cashless claim and reimbursement is easier with one large policy.

– This makes management and documentation stress-free for family also.

– But not all insurers allow increase easily.

– They may ask for fresh medical tests.

– Premium may rise more steeply with higher cover.

– You must check if premium is sustainable long term.

» So, What is the Most Prudent Mix?

A mix of all three is not practical.

But a combination of Option 1 and Option 3 makes more sense.

Increase your current health insurance to Rs 15 lakh.

With NCB, you may touch Rs 25–30 lakh in a few years.

This becomes your strong base policy.

Then set aside Rs 20 lakh in a mutual fund portfolio.

Use actively managed diversified funds via MFD + CFP route.

This becomes your health buffer fund, outside of insurance.

This fund gives confidence to handle costs not covered by insurer.

Also helps in home treatment, post-hospital care, or non-network bills.

This mix gives liquidity + protection.

It avoids new policy hassles and duplication.

It balances growth, flexibility, and protection.

» Disadvantages of Skipping Insurance and Investing Only in Mutual Funds

Medical costs may hit when your fund hasn’t grown enough.

Some critical surgeries can cost Rs 15–20 lakh in private hospitals.

Without insurance, entire burden falls on mutual fund corpus.

You may lose long-term compounding if you withdraw early.

Selling MFs during downturn may force losses.

Insurance, even if unused, gives peace of mind.

» Disadvantages of Taking New Health Insurance

Duplicate policy increases paperwork and renewal headaches.

Two insurers may delay claims if both are involved.

Managing new waiting periods adds risk.

Premiums keep rising with age and inflation.

New policy may get excluded after a certain age or medical issue.

» Advantages of Increasing Existing Policy

NCB benefits are stronger with higher sum insured.

Better claim settlement track record with known insurer.

Premium is more predictable and manageable.

You avoid dual claim hassles.

Works well with hospital cash benefit and top-up options.

» Why Not Just Rely on Investments Alone?

Medical inflation is higher than MF returns in short term.

A Rs 20 lakh corpus is not always available during market crash.

You cannot predict when illness strikes.

Insurance gives immediate financial support when needed.

MF-based buffer is good, but not a standalone health strategy.

Together, they offer confidence and coverage.

» Why Not Index Funds?

Index funds look cheap but they don’t beat inflation always.

They lack active management in tough market cycles.

Your healthcare fund needs risk-managed performance.

Actively managed funds, guided by CFP + MFD, give better results.

Active funds adjust portfolio based on market and sector health.

Index funds are slow in recovery after market fall.

» Why Not Direct Funds?

Direct funds seem cheaper, but they come with DIY burden.

Mistakes in fund selection and review may cost you more.

No emotional support during market panic.

You need professional help for rebalancing and tracking.

Regular funds through MFD + CFP bring strategy, discipline, and review.

You don’t invest blindly. You invest wisely.

» Why This Mix Gives You Control and Peace

Your health insurance works as first protection.

Mutual fund corpus works as second shield.

Your family stays covered, and your wealth stays safe.

Claims are handled, and out-of-pocket expenses are also managed.

Your long-term financial goals stay undisturbed.

This gives stability during emergencies.

» What Should You Do Now?

– Contact your insurer and ask for policy upgrade to Rs 15 lakh.

– Check new premium and terms.

– If feasible, go ahead with enhancement.

– At the same time, start your MF health corpus.

– Use SIP and lump sum to build the Rs 20 lakh goal.

– Choose balanced, diversified, actively managed mutual funds.

– Take help of a CFP to select and monitor.

– Review every year and adjust as needed.

» Finally

You have done great by thinking this far.

Your children and spouse will be safer because of this approach.

Medical costs won’t scare you when your protection is in place.

Insurance and investments must go together.

Neither alone can do full justice.

Act now. Protect today. Prepare for tomorrow.

That’s the true way to build a financial legacy.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: At 43, with two young children and a stable income, you are making the right move by planning ahead for rising healthcare costs. A future-ready medical backup of Rs. 30 lakhs is wise and needed.

Let’s now assess each of your options in detail. We will see which is more practical, economical, and reliable in the long run.

? Your Current Situation Review

– You already have a health policy of Rs. 5 lakhs.
– With No Claim Bonus (NCB), it grows to Rs. 10 lakhs.
– This is good, but may not be enough after 10–15 years.
– Healthcare costs are increasing 12–14% per year.
– You want to increase cover to Rs. 30 lakhs now.
– You can either invest Rs. 20 lakhs in mutual funds.
– Or increase or buy new health insurance.

We will now compare these three options.

? Option 1: Invest Rs. 20 lakhs in Mutual Funds

– You plan to invest Rs. 20 lakhs in mutual funds.
– This will be earmarked for future health emergencies.
– This fund will grow with time.
– You will have control and liquidity.
– But this is not a replacement for insurance.

– If a big hospitalisation comes early, this fund may not be ready.
– Medical bills can go up to Rs. 15–20 lakhs easily.
– If this happens early, you may need to break MFs with loss.
– There will be tax on redemption.
– Equity fund gains above Rs. 1.25 lakh taxed at 12.5%.
– Short term gains taxed at 20%.
– Debt funds taxed as per income slab.
– So this is useful only as a backup.
– Not the main health plan.

Use this fund as Plan B. Not Plan A.

? Option 2: Buy Another Policy of Rs. 10 Lakhs with NCB

– You are considering buying a separate Rs. 10 lakh policy.
– With NCB, it will grow to Rs. 20 lakhs over time.
– This gives you a combined cover of Rs. 30 lakhs in future.
– Premium will be low now, as you are young.
– It will be independent of your main policy.

– If one policy has room limit issues, you can claim the other.
– Helps if you are admitted in two different years.
– This offers better flexibility.
– No single company dependency.
– Also allows you to compare benefits later.
– But you need to manage two policies yearly.
– Extra paperwork during claims.

Still, this is a good and practical choice.

? Option 3: Increase Existing Cover to Rs. 15 Lakhs

– You can also increase your main policy to Rs. 15 lakhs.
– With NCB, it may go to Rs. 25–30 lakhs over time.
– This keeps things simple.
– One policy, one premium, one renewal, one claim process.

– But this also has risks.
– If claim is rejected for some reason, full plan fails.
– If insurer’s network weakens, you lose options.
– You are completely dependent on one provider.
– You also lose product comparison benefits.
– If premium becomes high in future, no exit option.

This may look easy but lacks flexibility and protection diversity.

? Recommended 360 Degree Strategy

The best choice is not one option. Combine smart elements from all.

– Increase current policy from Rs. 5L to Rs. 10L if premium is reasonable.
– Buy a separate Rs. 10L policy now from a reputed different insurer.
– Let both grow with NCB to Rs. 20L each.
– This gives you a Rs. 40L total cover in 5–7 years.
– No need to increase to Rs. 15L in one policy.
– It’s better to split for claim flexibility.
– Alongside, keep Rs. 10L in mutual fund for emergencies.
– Use only when both policies are insufficient.
– This hybrid approach keeps cost low and protection high.
– You gain liquidity, flexibility, and future options.

? Role of Mutual Fund as Support

– Mutual funds are best for long-term growth.
– Not ideal for immediate health expenses.
– They work well when used as a buffer.
– Keep Rs. 10–12L in hybrid or debt mutual fund.
– Avoid keeping full Rs. 20L.
– That money may be idle or taxed heavily when used.
– Instead, put remaining Rs. 8–10L in equity mutual fund.
– It can be for general goals like child education.
– Don’t make your entire health planning depend on mutual funds.
– Their value can drop just when you need money.

? Use of Regular Mutual Funds via MFD with CFP

– Don’t invest in direct mutual funds for this.
– You will miss expert review and timely advice.
– Direct plans don’t help during emotional or medical crisis.
– Regular plans through MFD with CFP give support.
– You get handholding, switching advice, and better strategy.
– For goal-based investing, personal help is more valuable than saving 0.5% fees.
– With right guidance, you’ll avoid panic selling or wrong redemption.

? Disadvantages of Index Funds in This Case

– Index funds follow market. They don’t manage risks.
– If markets fall before hospitalisation, fund value falls.
– You cannot wait in such emergencies.
– Active funds managed by experts adjust based on risk.
– Index funds can never protect downside.
– Don’t use them for emergency needs.
– They are not suitable for critical goals like health protection.

Always choose actively managed funds via Certified Financial Planner.

? Final Insights

– Health cover of Rs. 30L is necessary today.
– But don’t depend on just one tool.
– Use insurance for large cover and liquidity.
– Use mutual funds for backup and inflation hedge.
– Split cover between two insurers for safety.
– Avoid direct plans and index funds.
– Get help from Certified Financial Planner.
– Monitor medical inflation and revisit policy limits every 5 years.
– Keep nominations updated and involve spouse in policy info.
– Continue NCB to increase cover without extra cost.

By using both insurance and mutual funds wisely, you stay fully prepared.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: It is suggested to set up Education fund and Funds for Children Marriages by suitably investing in Good Equity Mutual Fund Schemes as per your risk profile. You can set aside in MF schemes Rs 20 lacs for this purpose. Also Create an Emergency Fund in Bank FD or Liquid MF Scheme equivalent to 6 Months of your monthly household expenses. For Medical Insurance, it is suggested to take additional or Super Top Up Health Cover for Rs 20 Lakh. Also prudent to contact a Certified Financial Planner.