Personal Loan vs Health Insurance for Diabetes

Diabetes, a disease when in control, feels negligible! You live as you always do, cheerful and happy. When out of control, it leads to disease after disease, leaving you shocked. Such is the puzzle diabetes is. While healthcare professionals and many online journals emphasise exercising and maintaining a healthy diet to stay away from the complications associated with diabetes, there's no certainty that following all these will help you control diabetes. The uncanny nature of this disease will always keep you on your toes! That doesn't mean you should not follow a healthy regime.

At the same time, the financial complications arising from diabetes-related complications need to be looked at seriously. Hospitalisations resulting from such complications can cost you heavily if not planned beforehand.

You have two options - personal loan vs health insurance for diabetes. Both have their share of pros and cons. In this blog, we will discuss all that and more. But before that, let's be briefed on diabetes and the complications it can lead you to.

What is Diabetes?

Diabetes is a disease or condition in which blood sugar goes beyond the required levels. The insulin secretion from the pancreas becomes weak, leading to diabetes and its complications.

As per healthcare institutes, one must have a fasting sugar within 70-100 mg/dl and 100-140 two hours after a meal.

There are three stages of diabetes - Prediabetes, Type 1 Diabetes and Type 2 Diabetes.

Prediabetes is a condition where the glucose remains high but less than the level that's deemed critical.

Type 1 Diabetes is a condition where blood sugar fluctuates frequently. Sometimes it will remain within the limits, sometimes it will surpass them.

Type 2 Diabetes is a chronic condition where blood sugar usually remains high, leading to hypertension, increased blood pressure, renal and heart problems, and several other health issues.

Common Diabetes-related Complications and Their Cost of Treatment in India

Uncontrolled diabetes will likely lead to kidney and heart issues over the long term.

In case you need a kidney transplantation, be ready to foot a bill of INR 5-10 lakh, depending on the type and stage of treatment. At the same time, dialysis can cost you up to INR 15,000 per month for the time you need it.

Whereas the treatment cost of heart-related issues depends on the type of surgery you need.

Heart Transplant Surgery - INR 18.5-32 lakh

Angioplasty and Stent Replacement Surgery - INR 1.5-3.2 Lakh

Heart Valve Repair/Replacement - INR 2.4-5.7 Lakh

Coronary Artery Bypass Grafting - INR 1.8-3.6 Lakh

What is a Personal Loan?

A personal loan is a credit you obtain from banks or non-banking finance companies (NBFCs) at interest rates ranging from 11-25% per annum on average. Most banks and NBFCs disburse a personal loan for a maximum of five years, with a few extending up to seven years.

Successful loan disbursement requires meeting the eligibility criteria set for income, credit score, employment, residence, etc.

Depending on the loan amount, your income criteria will differ. Usually, banks ensure the proposed personal loan EMI remains within 30-40% of your net monthly income before approving the application. So, your income should be such that the EMI/NMI ratio remains within the said proportion.

Coming to credit score, an important criterion banks evaluate before disbursing personal loans. A credit score, which represents the creditworthiness of individuals, is assigned by the credit bureaus within 300-900 in India. Bureaus assign the score based on how efficiently you have managed debt/s over time. The more efficient debt management the greater the chances of the score going past 750, a criterion for a hassle-free personal loan approval by the lenders.

Banks also stipulate a minimum work experience of two-three years with a minimum stay of one year in the current organisation.

Similarly, residence is also critical for lenders when deciding your personal loan eligibility. While you should be in your current residence for a minimum of two-three years, you also need to make sure your residence comes in an area where cases of violence and other anti-social elements are minimal to ZERO.

Health Insurance

Health insurance covers you against a wide range of illnesses including diabetes-related complications in exchange for a premium you need to pay. The premium amount is dependent on your age, health conditions, type of occupation, lifestyle, etc.

The younger you are, the greater the chances of grabbing a health insurance policy at a lower premium than when approaching an insurer for a policy when you are aged. However, the premium payable changes every five years based on the age slab.

Health conditions dictate the health insurance premium considerably. The more you are away from the disease/illness, the greater the chances to have a policy at a reasonably lower premium.

If you are working in an office setting, the premium payable will be lower compared to when working in coal mines, factories, or other accident or injury-prone locations.

You can either buy a comprehensive health insurance plan or a diabetes-specific plan from a wide range of insurance companies in India. Assuming you have diabetes, the insurance company will conduct a medical test to figure out your health before offering you a policy.

Comparing Personal Loan vs Health Insurance for Diabetes

Let’s start comparing a personal loan vs health insurance for diabetes-related complications based on several factors.

Cost

The primary consideration while choosing a personal loan vs health insurance is the cost likely of these two. Assuming the treatment cost of diabetes-related complications remains INR 10 lakh a year. The personal loan EMI will be INR 23,790, leading to overall interest payments worth INR 4,27,396. The calculations are based on an assumption of an interest rate of 15% per annum and a loan tenure of five years.

In comparison, the annual health insurance premium will likely be INR 15,000-25,000 assuming you are 30 years old with no illness now.

The Extent of Coverage for Diabetes-related Complications

If you had diabetes before buying comprehensive health insurance, most insurance companies won’t settle diabetes-related claims before a 2-4 year waiting period. The waiting period implies the time you need to wait before the insurance company starts covering you. In the case of a diabetes-specific plan, the waiting period can be for nine months to a year. In comparison, there’s no such bar with a personal loan. If your income and credit score suffice the loan amount needed to cover the ailment, the lender won’t have any problem disbursing you the same.

Value-added Benefits

Health insurance policies come with value-added benefits of premium discounts on maintaining a healthy lifestyle. For example, some policies come with a healthcare routine diabetics should follow to ensure their blood sugar remains under control. These include exercise, a healthy diet and several other methods. Your HB1AC, which determines the average glucose in your body for three months, should remain between 4% and 5.6%. If you maintain that level by following the routine prescribed in the policy, insurers will reward you with a premium reduction on renewal. In comparison, a personal loan does not come with such rewards. However, depending on the time of the year, lenders may come with an attractive interest rate, or a zero-processing fee offer to tap into the various financial needs people want to fulfil with a personal loan.

So, What Should You Choose for Diabetes?

Health insurance reigns supreme over a personal loan for diabetes-related complications owing to being more affordable, extensive coverage and overall benefits. However, health insurance policies may not cover everything as there may be a few exclusions. For that uncovered part, you can consider applying for a personal loan at attractive interest rates. With this, we end our session today. Continue showing your love and appreciation, we will stay on top of your demand with insights and analysis.