Question: I have a young family and would like to consider medical insurance now that I get my daily bread through gigs with no formal employment.
Navigating the gig economy while managing a growing family presents unique financial challenges, particularly when it comes to securing essential benefits like health insurance.
Recent financial insights have highlighted the complexities of personal finance for those with variable incomes, emphasising that the root of many financial struggles often lies in income instability and by large, an unemployment crisis rather than poor investment choices or overspending.
Despite being educated, it is estimated that the youth make up at least 80 percent of the unemployed in Kenya.
For gig workers—a majority of whom are the youth, this reality underscores the importance of strategic financial planning, especially when it comes to crucial expenses like health insurance and retirement planning or even budgeting for day-to-day family operations.
Approaching financial decisions, including your question on health insurance, requires careful consideration and a long-term perspective.
Budget
In the gig economy, where income can be variable and traditional benefits are often absent, taking control of your health insurance needs is a powerful step towards financial empowerment.
It demonstrates foresight, responsibility, and a commitment to your family’s well-being—qualities that will serve you well in all aspects of your financial journey. That said, you need to consider benefits that suit your budget.
Below are some of the estimated costs for individual plans for a 21- 30-year-old I have scouted around just to give you a highlight of the need for a budget.
Company A: The first health insurance provider I had a plan that provides an inpatient limit of Sh1 million and an outpatient allowance of Sh60,000 per person, without any dental or optical coverage, at a total premium of around Sh68,000.
Company B: This had a plan with a Sh1 million-inpatient limit, Sh75,000 for outpatient care per person, and Sh10,000 each for dental and optical services, priced at around Sh55,000.
Company C: This offered an inpatient limit to Sh2 million and outpatient of Sh75,000, maintaining the same dental and optical coverage, for a premium of around Sh70,000.
You need to be aware that the premiums increase with an increase in the number of dependants within the cover.
For instance, assuming you have a spouse and one child, a premium of around Sh69,000 would give you a plan of Sh3 million inpatient for the three of you, outpatient of Sh100,000, dental and optical of Sh10,000 each but from the outpatient cover and a maternity cover of Sh150,000 domiciled under the inpatient cover limit.
Benefits and needs
When selecting a health insurance plan for your family, it’s crucial to look beyond your current situation. Consider your family’s potential growth and changing health needs over time.
A comprehensive plan should cover a wide range of services, including hospitalisation, maternity care, paediatric services and critical illnesses such as cancer, stroke, kidney dialysis.
While such coverage might seem more expensive initially, it can protect you from significant financial distress in the future.
In the samples earlier mentioned you find that the benefits comparisons would constitute a different article on its own.
For instance, the waiting periods varied, all the three had different bed limits with one offering a general ward bed, another standard private room capped at a certain amount.
Additionally, they had different post-hospitalisation care limits, as well as waiting periods and different limits on maternity, ante and neonatal care.
Payment flexibility
Budgeting for insurance premiums on a variable income can be challenging, but there are strategies to make it more manageable. Insurance as we all know it is heavily reliant on the cash and carry rule, whereby your policy will not be rendered active unless the premium is paid.
However, some insurers have partnered with banks to offer insurance premium financing -an option of making your payments in installments.
This allows you to spread the total cost over time and ease your financial burden as opposed to if you were to make the full payment at once.
A cheap plan should never be the end goal
While it may be tempting to opt for the cheapest plans available, especially when finances are tight, this approach can backfire.
A plan with low premiums but high deductibles or limited coverage can leave you financially vulnerable if significant health issues arise.
Instead, focus on value – a plan that offers comprehensive coverage at a price you can manage, even if it's not the lowest available.
Also look for features that can help manage costs. Some insurance plans now offer incentives for maintaining healthy habits, others include preventative care like wellness packages which can lead to lower claims ratio, whilst other providers offer plans that include telemedicine services that can help reduce out-of-pocket costs for routine care.
Always take a keen interest in the finer details
The reality of things is that insurance is not bought but sold and as such, there are instances where everything will not be laid out on the table at the point of sale.
Therefore, before committing to a plan, it is crucial to thoroughly understand the policy terms and conditions.
Always ask about hospital copays, sub-limits and exclusions within your cover, try and understand how the plan covers emergency services, if the insurer has a network, ensure it includes healthcare providers in your area to avoid out of pocket expenses in cases of emergencies.
Finding the right balance between comprehensive coverage and affordability is always challenging but essential. Remember, health insurance is not just an expense but an investment in your family’s future.
In securing appropriate coverage, you will not only be protecting against potential health crisis but also building a foundation for financial stability.
While you cannot simply budget your way out of financial instability, making smart, long-term financial decisions like this can significantly impact your overall financial health.
The writer is a Financial Communication Specialist and can be reached via [email protected]
