DT Personal Finance: Group health insurance: Follow the herd, or go solo?

CHENNAI: Most employers provide group health insurance coverage to their employees. And while the amount of coverage may vary based on the profile and seniority of the employee, it is something many staffers rely solely on when it comes to health insurance. A large percentage of employees feel if they have a group package provided by their company, then that alone is sufficient. This can be risky as group health covers may not be enough for everyone.

Here’s why:

Unless you are a senior in the firm or your employer has a generous employee-benefit policy, chances are that group health coverages might offer a blanket of just a few lakhs. They may not be enough when you consider the rising medical costs. So why doesn’t every company provide large cover? Corporates run on profits. And group health insurance premiums are an expense for them. To control costs, they may not opt for high covers and instead look at giving the most cost-efficient insurance for all the eligible employees.

So, if the group cover is not enough, what is the right health insurance amount? There is no one right answer here. It depends on the individual’s unique requirements and family medical history. So, while a bachelor with no dependants may see Rs 5 lakh as enough, an employee with a spouse and two children might need a cover of Rs 15-20 lakh at least. And if your corporate cover falls short? Get one of your own, because if your company gives a cover of Rs 5 lakh and if for some reason your hospitalisation bill is Rs 9 lakh, then in absence of any personal health insurance, you will have to pay Rs 4 lakh from your own pocket.

Surprisingly, many companies don’t cover employee’s dependants. If that’s your employer, then you should not ignore this gap in insurance and get a family floater health insurance for your dependants urgently.

Your current corporate cover is valid only till you are working with the present employer. And you may feel it is enough. But if you switch jobs (for salary hike), you may end up in an organisation which has a lower group health insurance? If that is the case, you will end up being under-insured. So, to cover the risk of future jobs not offering large covers, you should have a personal health cover for you and your family.

The organisation provided group health insurance will only be there till you retire. After that, you are on your own. If you are nearing retirement (in the next 5-10 years) and for some reason have still not got personal health insurance, then get one ASAP. You never know that if you want to buy one after retirement, the insurer may even be willing to sell you health insurance if you have health issues and pre-existing diseases at that time. So better to buy it earlier when you are younger and healthier. Corporate health insurances are a blessing in times of need. They are easy to handle, they generally don’t require pre-medical check-ups or waiting periods, and also cover pre-existing diseases. And these can come in handy not only for you but for dependent old parents.

So, if you ever have a hospital bill to settle, then it is always advisable to first use your corporate health insurance. If that is not adequate, only then go for a claim on your personally purchased health insurance. This will also help in maintaining the no-claim history and may give No-Claim Benefits during renewals.

(Dev Ashish is a SEBI-registered investment advisor and founder of Stableinvestor.com, who provides fee-only investment advisory services)