Company health insurance or Separate health insurance?

Health Insurance vs Corporate Insurance

“At CAGRfunds, we do a weekly session of knowledge sharing within the team. Last week, we had a rather long discussion on whether a separate health cover is required if the employee is covered by his or her company health insurance (Mediclaim) policy.

So we started digging into the various critical reasons as to why we need health cover at all. We realized that depending solely on the health insurance provided by our companies can land us up in the following situations:

Corporate Health Insurance coverage is the same for all

The employer decides our coverage amount. So, if your coverage amount is 5 lacs and your hospital bills amount to 7 lacs, the balance comes out of your pocket. Therefore, you need to ascertain the adequacy of the coverage as per your own health conditions.

You may not be rewarded for being healthy

Most companies (especially the small and midsized ones) deduct insurance premiums from our salaries. For people having the same coverage amount, the premium is also the same year on year, irrespective of how healthy or unhealthy an individual might be. So, if you are a healthy non-smoker individual, you are perhaps paying the same premium as your colleague who is slightly unhealthier than you are.

Also, in an individual health insurance, a lot of policies give either “no claim bonuses” or discounts on subsequent premiums for claim free years. That means you have more security and you save more money if you take care of your health.

You do not have the flexibility to prioritize the features you want

Corporate Insurance is a general insurance that covers a group of employees. So, the features are generic and may not be completely in sync with what you prefer. For example, if there is a history of cancer or diabetes in your family (which puts you at risk for the same), there is a chance your corporate insurance will not cover it. Or, your corporate insurance may be capping your room rent to a small % of sum insured which is unlikely to cover even half of your actual room rent.

You will have zero health cover just when you need it the most

Corporate Insurance will only cover you till you are employed with the company. So, if you are currently depending on your corporate health cover, you will have none on retirement. If at that point in time, you decide to take a private health cover, it will cost you significantly higher than what it would cost if you take a policy when you are young.

You might face several issues on changing your employer

Drop in coverage amount

Your new employer may offer you a lower coverage than your previous employer. You might want to go for a separate health cover when that happens, but do take into consideration the increased premium that you will have to take at a higher age. Also, every new policy has a waiting period for pre-existing diseases. This means that the Insurance service provider will not sanction any claim arising out of any pre-existing disease during the tenure of the waiting period. In most cases, this period ranges between 2-4 years. The older you are, the longer it is.

Lesser Dependents

Many companies today offer health insurance for not only you but also your spouse, children, parents and (occasionally) your in-laws. But, not all companies offer the same protection. If you change your company, your new employer may only support you, your spouse and your children. Having your dependants not covered in future can lead to a considerable risk of an unforeseen medical expense.

But, what should you do if your corporate health cover seems to be adequate?

Well, it is certainly possible that your company adequately covers you and your family and also provides you with the features that you prefer to have. You can choose to adopt any of the following routes:

  1. Secure your cover for post-retirement: You can take a small cover separately so that you do not have to shell out a huge premium for taking a new policy post-retirement. A new policy at retirement will also subject you to the long waiting periods for pre-existing diseases which of course defeat the purpose of the policy at that age.
  2. Secure the possibility of a massive medical emergency: Corporate covers are at best, generally adequate for normal medical situations. In case of a massive unforeseen emergency, the chances of incurring a huge expense are quite likely. Therefore, you might want to secure that eventuality and take a large health cover separately to take care of the same.

Want to know more about health insurance? Contact us on +91 97693 56440 to know more about the suitable plan for you.

5 things you should do at the start of every financial year

Rebalance and diversify Your Portfolio

Do you park all your surplus funds in Fixed Deposits? Or are you someone who is an avid believer of investing in stocks? The risk associated with investing in a single instrument is fairly large. Diversification across asset classes is essential to ensure we do not suffer a major setback during years of softer performance. Roughly, 100 less our age should be our ideal equity exposure. And remember to count your PF as part of debt exposure.

 Salary increment? Increase SIP amounts

To keep pace with the rising expenditures, it is essential to invest more in our SIPs (Systematic Investment Plans). It will not only keep a check on our rising expenditures but also prove to be a reliable source of money in the long run. So top up your ongoing SIPs with a portion of your increment.

Start an SIP now, if you haven’t already

The concept of building a corpus bit by bit is something we all learn in our childhood – Flashback, the good old “Gullak” days! But as we grow up, we tend to get busy with other supposedly more important things. It is time we get to the basics and bring that habit back in practice. SIPs are a great way to build wealth over the long run. They not only inculcate discipline in our investment habits but also cater to a range of our medium to long term goals. So what are you waiting for? Start small but start now.

Open NPS Account

The National Pension Scheme (NPS) is a government initiative to reduce the taxable income of an individual. While we all look for ways to plan our tax, starting an NPS account will help us to reduce our tax by up to INR 15,000 annually (If you are in 30% tax bracket). Now that is some healthy saving!

Get Health Insurance

With an increasing workload on an individual, there is a tendency to avoid health issues. And if we haven’t got our health insured, things can get really complicated in case of emergencies. At the start of this financial year, let’s make health our priority and get a health insurance. It will not only cover any medical contingencies but also give us tax benefits under Section 80C of the Income Tax Act.