Beyond Mediclaim – How to Create Extra Funds for Medical Expenses

When you think of financial planning, health insurance is one of the most critical pillars. But relying solely on your Mediclaim policy might leave gaps. With rising healthcare inflation and increasingly complex treatment procedures, it's crucial to think beyond just a traditional health policy.

Let’s explore why extra medical funds are essential and how you can systematically create them.

How Health Insurance Fits into Your Plan

Your first line of defence is a comprehensive health insurance policy. Whether you opt for individual covers or a Family Floater, the objective is to mitigate hospitalization and treatment costs.

A Family Floater Plan is generally more economical, offering a larger shared cover for a lower premium. But remember, hospitalisation costs have skyrocketed, and inadequate coverage can derail your financial goals. That’s why health insurance forms the core of every good financial plan, but not the whole.

Why You Need Extra Funds Beyond Health Insurance

Here’s why you must build a backup medical corpus alongside your Mediclaim:

• The hospital you visit during an emergency might not be on your insurer’s network. This means upfront payment before reimbursement.

• Policy limits may get exhausted, especially with multiple hospitalisations within a year.

• Many non-hospitalisation costs (like medicines, consumables, diagnostics) are not covered under standard policies.

• Co-payments and deductibles mean you still pay a portion of the bill from your pocket.

So, how do you prepare for these out-of-pocket expenses?

Strategic Ways to Create a Back-Up Medical Fund

Fall Back on Your Emergency Fund

Your emergency fund, typically 5–6 months’ income, acts as a financial buffer. Ideally, this fund should sit in liquid mutual funds or high-interest savings accounts for quick access.

Pro Tip: Always replenish the fund after usage to maintain its strength.

Create a Medical Emergency Fund Using Tax Breaks

Leverage your Section 80D tax benefits for both your family and senior citizen parents. Here’s how:

• If you claim ₹75,000 in deductions (₹25,000 for self/family + ₹50,000 for parents), and you fall in the 31.2% tax bracket, your annual tax savings = ₹23,400.

• Invest that amount (₹2,000/month) in a balanced or hybrid mutual fund SIP @10% CAGR.

• In 10 years, you’d build a corpus of ₹4.03 lakhs, without additional burden.

Leverage Add-On Riders to Life Insurance

Today’s life insurance policies offer critical illness riders, which can cover major medical conditions like cancer, stroke, and heart attacks.

These riders are essential because:

• Such illnesses involve long-term care and income loss.

• Your health policy might not fully cover them.

Adding these riders is a cost-effective way to prepare for high-impact health events.

Use Super Top-Up Plans to Extend Coverage

Super top-ups allow you to expand your health coverage without drastically increasing premiums.

For example:

• Base policy: ₹5 lakhs

• Super top-up: ₹25 lakhs (kicks in after ₹5 lakhs are used)
  Total cover: ₹30 lakhs at a fraction of the standalone cost.

This also helps you preserve your no-claim bonus (NCB) and avoid buying entirely new policies for higher coverage.

Final Word

Health insurance is the foundation, but true financial preparedness means building layers of safety — emergency funds, tax-optimised savings, strategic riders, and top-ups.

Think of it as a 360-degree health shield. Because when health issues arise, you want to be focused on recovery — not repayments.