Group cover is welcome but get your own plan

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Don't rely exclusively on the health insurance provided by your employer, you can purchase your own policy for additional security

Group health insurance cover by the employer has a lot of benefits in terms of product, pricing and servicing when compared with an individual insurance plan. But such a plan can be discontinued with a change in job or when the company withdraws the scheme. Health insurance is a long-term investment and an inevitable part of one’s financial commitments. One should not be solely dependent on the group cover provided by the employer as health cover is needed just as much – perhaps more – when one is jobless or retired.

For a group cover, generally the employer negotiates with the insurance provider on the basis of the bulk premium paid for the entire staff. This makes the group product much more flexible than the retail ones bought by individuals.

Most insurance companies do not insist on medical checkup of the employee or his family members and the restrictions in terms of entry age also do not apply to most of the group policies. It covers almost all the pre-existing ailments of the employee and his family.

This also includes maternity cover. “In an individual health policy, many companies do not provide maternity cover. But in group cover, all the maternity expenses are covered from day one itself. Similarly for other ailments too there is no waiting period and this applies to elderly members of the family,” says Sanjay Pande, executive director of Amicus Advisory. Some of the insurance companies also offer outpatient cover exclusively for group policies.

But largely, there will be a limit to the sum insured in the cover offered by the employer. If the employee thinks the sum insured will not be sufficient for her entire family, she should go for an additional individual policy.

“Some employee-friendly companies also provide the benefit of ‘corporate buffer’ for employees who have exhausted their basic cover. In such cases, the employer negotiates for a cover of, say, Rs 3 lakh for each employee and a corporate buffer of, say, Rs 3 crore for the entire set of employees. Whoever exhausts his basic cover can withdraw the remaining amount from the corporate buffer. The terms and conditions for the corporate buffer differ from company to company,” says Pande.

In case of pricing also, group covers can be termed largely cheaper than individual policies. The sheer volume of premium paid under the group policy helps the employer negotiate better with the insurer. Insurance Regulatory and Development Authority has raised concerns about pricing group policies cheaper than individual policies. However, in an industry which is dictated by volumes, price negotiations are expected to continue.

“Pricing can work the other way as well. If the company has a history of making higher number of claims, the premium would go up. In case of an individual policy, the person can enjoy the benefits of no-claim bonus and other discounts if he is prudent in his medical spend,” says Pande.

In most of the group cases, employees do not pay the premium out of their pockets as the company pays it as part of their employee retention programme. Some companies pay for the cover of the employee and his immediate family and ask him to pay for the extended family.

Servicing is largely found to be better when it comes to group cover. “Group policies are privileged in terms of servicing. Most of the time volume of the business determines the quality of service. The insurance companies attach greater value to the entities which have generated higher volumes for them,” says Pande.

Undoubtedly, group cover by an employer is easier, hassle-free and largely comes free of cost. But a group cover is controlled by the employer and he determines the sum insured and other terms and conditions of the cover. Employees who have specific requirements as per their age and health profile should go for an additional individual policy.

In a group cover, the employee does not build a relationship with the insurance company and the policy gets terminated when he quits the job. The second employer need not necessarily provide health cover.

In some cases, the employer might discontinue the health cover or may change the terms and conditions of the cover. The employer can also exclude parents or extended family from the cover. A secondary cover will help the family stay afloat during such times.

A health cover is all the more necessary when a person retires as the income level drops and the health risks increase. If the person had invested in an individual health plan early in life, he can enjoy several benefits like lifetime renewal and absence of co-pay by the

time he retires. The premium will be too high if one opts for a fresh policy at the retirement age and the terms and conditions too will be stringent.

“Health cover should be uninterrupted and the benefits of having a continuous plan can be enjoyed only in an individual cover. It should be viewed as a long-term investment,” adds Pande.



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