Will My Health Insurance become Costly upon Relocating to the Countryside after Retirement?

A working individual spends the majority of his/her time in meeting responsibilities, planning finances and working on life goals. The purpose of this hustle is to lead a quality, easy and peaceful life post-retirement. A significant component of retirement planning is the health insurance coverage.However, if you have plans to relocate to the countryside post-retirement, you should be prepared to pay a higher health insurance premium.

The need and significance of health insurance attains even further importance at the old age. As you grow older, your body immunity and resistance power takes a downhill, which puts you at a greater risk of medical crisis. Consequently, the cost of availing a health insurance, i.e. premium amount is higher for a senior citizen as against a young or middle-aged individual.

Location plays a significant role in the determination of the health insurance premium. In India, there are three zones based on which the premium amount of health insurance is decided. Rural areas fall under Zone 3 and the premium amount in this zone is supposed to be the lowest.However, there arises a paradoxical situation, whereby the premium paid by the countryside dwellers is relatively higher than that of the urban people. This inconsistency, where rural people pay higher premium despite lower costs of living, stems from two factors in particular:

• Inadequate healthcare facilities The healthcare facilities available in the rural areas do not match with the medical facilities of urban areas. The disparity exists in terms of quality, quantity, availability and accessibility. Community Health Centres (CHCs) across India have a shortfall of 82% in terms of surgeons, obstetricians, gynecologists, physicians and paediatricians.[1]Also, available public healthcare have not been much effective in delivering quality results.[2]Thus, there is a major dependability on the private sector medical services. The cumulative effect is such that it raises the cost of treatment and subsequently, the premium for health insurance witnesses a hike in these areas.
• Lack of competition Unlike the people residing in rural areas, the people living in cities are aware of the need and significance of health insurance. In fact, in some of the rural pockets of the country, people are not even aware of the plans and programmes that are exclusively designed for them. Thus, there are not many buyers of health insurance in the villages.

Due to the absence of a well-developed market of health insurance services, there is not sufficient competition in these areas. The handful of players who rule the health insurance market in rural areas charge higher premium as they don’t have the population bandwidth to grow their business.Hence, if you have planned to relocate to a small town after retirement, you must plan your finances accordingly to be able to continue your health insurance policy even after the hike in its premium amount.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.