In times of a pandemic, having an individual or family floater policy of your own makes more sense as group health insurance has its own limitations
According to financial planners, a family of four should have a health cover of at least ₹15-20 lakh
The rate at which Covid-19 is spreading should be a nudge for you to buy an individual health insurance policy and not just depend on what your employer provides. Reliance on group health policies is high in India. According to data from General Insurance Council, as of February 2020, the total health insurance industry is worth ₹45,997 crore, of which ₹23,422 crore came from group policies.
Though premiums in group health policies are usually lower than what individual policies charge, they come with their own limitations. The biggest issue is the risk of being left without a cover , which could have stressful implications in times of a pandemic. So get your own individual or floater policy to secure your family.
To start with, it is up to the employer’s discretion to change the sum insured and the number of people covered under the policy. Worse, your employer or the company under which you have a group health cover could decide to discontinue the insurance cover, leaving you with nothing if you don’t have an individual health policy. You will also have to assess if the cover is adequate. Anand Roy, managing director, Star Health and Allied Insurance, said most employer health policies have various grades, so if you are a mid-level or entry-level employee, the coverage provided may not be sufficient. “This only reiterates the importance of having a personal health policy with adequate sum insured," added Roy.
Also, you can be left without a cover when changing your job. During a pandemic, this could have a disastrous implications in case of a medical emergency. “If you leave the employer and there is a gap in the employment prior to joining the next employer or until you start something on your own, you will be left with no cover if a health emergency arises," said Ravi Vishwanath, president, accident and health, HDFC ERGO General Insurance.
If you are planning to quit your job, note that you can port from the employer’s group policy to an individual health policy. You will have to apply at least 30 days before resigning. “Porting will be subject to underwriting by the insurance company. In such instances, the individual will have to declare the past medical history and may have to undergo a pre-policy health checkup as well," said Vishwanath.
Also, remember that not all group health policies cover dependant parents. “Earlier most employers used to cover the employee’s parents as well. This is now changing, and more and more employers are looking at insuring only the employee," said Melvin Joseph, a Sebi-registered investment adviser and founder, Finvin Financial Planners.
If the policy covers your parents as well, understand that this could change at any point and it may become difficult for you to buy a health policy for them considering their age and health conditions. Premiums too could go up. “Purchase separate health insurance for parents to ensure they are insured in the long term. Though there are some senior citizen-specific policies, they come with a host of restrictions and co-payment clauses," said Joseph.
Remember that you’re buying a policy to meet your future medical needs. What costs ₹5 lakh today will not cost the same a few years from now, considering a double-digit medical inflation. Financial planners suggest a cover of at least ₹15-20 lakh for a family of four. “This is possible through a combination of a basic family floater policy and a super top-up," said Joseph.
Roy recommends a policy that rewards you for every claim-free year by increasing the sum insured. Look for a comprehensive cover with an adequate sum insured. “Go for a policy that offers lifetime renewal to ensure you’re insured in your golden years as well. Also, make sure the insurer has a wide network of cashless hospitals," Roy added.
Further, watch out for sub-limits in the policy such as a cap on room rent, because this can have a bearing on all other associated costs. “One must clearly understand from the policy conditions the maximum amount up to which she can spend on the room, if hospitalized. Other than room rent, co-payment, exclusions and waiting period are other factors that need to be considered before buying a policy," said Rakesh Goyal, director, Probus Insurance, an insurtech broking company. Mint recommends opting out of policies that have a room rent cap because it creates complication during settlement of claims and can also result in reduction of the claim amount as inflation increases.
With Covid-19 cases rapidly increasing in India, insurers said they’re seeing some traction in the purchase of health insurance. As of now, there are no restrictions on purchase of new policies or porting.