Calculate the medical emergency corpus your family needs — beyond what insurance covers. Includes hospitalisation costs, income loss, post-treatment care, and inflation-adjusted targets.
Healthcare costs in India are rising at 13–14% annually — far above general inflation. A hospitalisation that cost ₹2L in 2015 can cost ₹5–6L today. While health insurance is essential, it covers only in-patient hospitalisation and has numerous exclusions, sub-limits, and co-pays. A dedicated medical emergency fund fills these gaps and provides liquid cash exactly when you need it most.
Most policies exclude: dental treatments (unless due to accident), OPD (doctor visits, medicines), cosmetic surgery, fertility treatments, eyeglasses, hearing aids, pre-existing diseases during waiting period (2–4 years), specific diseases like hernia/cataract in first year, and alternative medicine (AYUSH, partial coverage). Post-discharge home care, physiotherapy, and mental health treatment are often inadequately covered.
Under Section 80D: ₹25,000 deduction for self, spouse, and children's premium; additional ₹25,000 for parents below 60; ₹50,000 if parents are above 60. Total possible deduction: ₹1L. This is only available in the old tax regime. A ₹50,000 premium for a comprehensive family plan in 30% slab saves ₹15,600 in taxes.
Split across: (1) Instant access — savings account (₹1–2L), (2) 2–3 day access — liquid mutual fund or overnight fund (₹2–4L), (3) Medium term — short-term debt fund or FD with sweep (rest of corpus). Avoid keeping it all in a fixed deposit with penalty on premature withdrawal — emergencies can't wait. Never use equity funds for this corpus as markets may be down exactly when you need it.
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