Is Health Insurance Premium a waste of Money?

A lot of people think that paying health insurance premiums is a waste of money.

After all, why pay the premiums for years and years, and what if nothing happens? After all, our grandparents never had any health insurance and they are in perfect health. Why pay for something which is an imaginary risk?  These health insurance companies are here to just make money, fool customers with their fancy presentations and brochures, and reject claims finally.

Why not just save that money or enjoy life!.. Some people also give a nice example of how they can save up the premiums each year and if after 10 yrs, there is some hospitalization, they can use the money to pay the bills.

This is exactly how millions of investors feel and that’s one reason why insurance penetration is so low in our country. I am sure you must have met someone in your office or in your family who just reject the idea of taking the health insurance, because “Company ka cover to hai na” types of remarks

I see two big reasons why many people think this way!

Reason #1 – Transactional Benefit Mentality

A lot of people have a transactional benefit mentality, where they want to get some tangible benefit the moment they pay.

  • Like you pay for a movie, and you watch it.
  • You pay for apples, and you get it.
  • You buy a TV on Amazon, and it gets delivered!

What do you get when you pay your health insurance premium? What do you get?


That’s all, a promise that your medical bills will be taken care of in the future, only if it arises?

It’s very hard for these people to see benefits in terms of probabilities and future possibilities. It’s all about a short-term mindset and no ability to visualize the future.

This is even true for many investors who buy health insurance premiums, but eventually, they let expire the policy because they feel frustrated looking at their premiums go waste!

Reason #2 – Fake confidence of “Nothing will happen to me”

I don’t know how some people have this super confidence in themselves that “nothing will happen to me”

People don’t say it, but many people truly believe that there are fewer chances of anything bad happening to THEM.. It all happens to others.

I have lost one of my close friends and one more known person to COVID in the last 12 months, both below 40 yrs!. I was also admitted to the hospital in Nov 2020 as I was having cough and breathing issues. Both the people who died in Covid got admitted the same way with minor issues at first, and then it got worse and finally, they died.

I survived.

Remember that a person who dies in an accident or gets cancer has the same “Nothing will happen to me” kind of confidence 5 min before the event happens. We are all like that.

I feel it’s nothing but a lack of maturity and a bit idiotic to think that nothing will happen to me or my family because “we are careful”.

If you are careful, it’s just that the chances of something bad happening to you reduces a bit. That’s all, it does not get eliminated. Don’t live in the imaginary world.

Premiums are wasted if nothing happens?

It’s foolish to think that premiums get wasted if nothing happens to you.

  • When you wear a mask, is it a waste if you didn’t catch COVID?
  • Was the helmet a waste if you didn’t meet the accident?

What about the protection it provided you and you had that peace of mind?

In fact, the best thing is that your health insurance goes WASTE!.. I have tweeted the same some time back

3 levels of risks

In any area of life, you have various levels of risk.

You either accept the risk, reduce the risk or transfer the risk!

Health insurance is all about transferring the risk of very big hospital bills to insurers by choosing to pay a premium each year. If someone does not want to pay the premium, it means that they are accepting the risk that someday they may have to shell out a big sum of money for medical reasons.

And sometimes it can run into such a big amount that it can wipe out your years of effort. Sometimes you may get a disease that may require multiple or regular hospitalizations and it can really be crippling to your financial life.

So it’s up to you to decide if you want to accept these big risks or transfer them to the insurer (The cost part)


Is company cover enough?

I have already said this multiple times.

A company cover many times is not a full replacement for full-fledged health insurance which you buy yourself. At best you shall see the employer cover as a complimentary benefit because it can go away anytime. You also don’t know if it’s sufficient for you or not? And the worst, you cant depend on it after retirement, when you will need it the most!