There are many situations, where insurance cannot help. If you are already ill, for example. People suffering from illness are the most eager to buy health insurance. But, for most, it is already too late. If you have had a disease that impacts one of the core body systems—cardiac, endocrine, mental health, neurological, renal, among others—then it is difficult to buy any insurance at all. For people suffering from mental ill-health, the issue is not so much that mental illness costs cannot be covered but more that even their physical ailments are not insurable. You have to buy health insurance when you are well and do not need it.
Similarly, insurance is ineffective if the main costs are for outpatient medicines, diagnostic tests or home care. In mental illnesses, the caregiver’s time is most expensive. In diseases such as stroke, where hospitalisation may not be extensive, the primary cost is an inability to work. Traditional mediclaim does not pay these costs. Some newer products can help but in a limited way.
Over the years, critical illness plans have steadily improved and now include diseases that do not require hospitalisation, such as stroke, Alzheimer’s or Parkinson. This insurance pays a fixed benefit not linked to actual medical costs.
Insurance does not help in cases that require long-term care. The commonest afflictions of the elderly require high-quality home care for life. Nurses or paramedics may be needed on call. In many situations, assisted living is required. These costs are hard to insure. In some international markets, long-term care insurance has been introduced, rather unsuccessfully, because care costs are extremely high.
