I am a member of a professional services body. My association has negotiated a discounted deal with a public sector insurer for motor insurance. There is a similar deal offered for health insurance as well. Should I opt for these covers? Are there any hidden clauses that I should be aware of when signing up for such a deal?
Motor insurance is a standard product which is easily portable across insurers. Motor insurance pricing is not fixed. The price varies based on the insurer, the car and the profile of the insured individual. Generally, groups with a large fleet are able to negotiate well with insurers and get a good deal. Further, motor insurance carries no waiting period. Claims can be made from the first day itself, and switching to another insurer is easy.
So you can opt for the insurer chosen by your association for motor insurance. However, there are a few things you should check before making the switch. While the core benefits of motor insurance are standardised across insurers, add-ons and service offerings can vary substantially. For instance, the number of service centres that offer cashless claim settlement varies by insurer. This has a significant impact on the ease of making a claim. Similarly, a few add-ons are offered only by select insurers. It is advisable for you to look at a few alternatives before settling on the insurer.
However, health insurance works very differently. Pricing for individual insurance products is fixed, and every individual policy carries a waiting period. In the case of health insurance, therefore, an association cannot negotiate the rates or benefits offered by the insurer in the general market. To address this, several associations offer health insurance on a group platform. By doing so, they are able to negotiate lower prices and greater benefits for their members. The downside of signing up with a group plan is that the prices move based on the claims experience of the group as a whole. Further, unlike individual health insurance, group policies are not renewable for life.
If the group is substantially large and likely to continue for a long time, then it should be able to absorb these risks. But portability from group to individual insurance is not very easy. So I recommend opting for an individual plan unless the benefits are substantially more on a group platform.
Abhishek Bondia is principal officer and managing director, SecureNow.in.
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