Do I need my own health insurance? Employer already has group policy

Yes, you should. Employer provided group policy might have lower cover, or co-pay, or a cap on room-rent. You should get one on your own, to decouple your insurance from your employer

Intro 🍁

According to IRDA (Insurance Regulatory & Development Authority) of India

A group insurance policy gives you advantages of standardized coverage and very competitive premium rates

The risk for a group insurance provider is spread over a larger population, hence making the premiums cheaper.

Group covers have lot of benefits.

Features ✨

Salient features of Group health insurance:

• PED’s (pre-existing diseases) are generally included from day one, with some exclusions.

• An option to increase Sum Insured (SI) as well as insure your parents/in-laws by paying an additional premium.

• TPA (Third Party Administrators) services are comparatively better in group insurance schemes due to higher absolute premiums paid by the group.

• You can port to another policy of the same insurer, to avoid having to wait out the exclusion periods for pre-existing conditions.

  However, you’ll have to start the porting process at least 30 days before you leave the organization, and the new policy will provide fewer benefits, as it’d no longer be a group policy.

Limitations 👎

Limitations of Group health insurance are as follows:

• Sum assured is generally lower than Individual or Family floater policy options.

  Due to the lower sum assured, they may have a room rent/ICU capping clause.You will end up paying more if your stay is in a more expensive room, since all major hospital expenses are linked to the room rent.

  Imagine if your medical bill is 2L, and room-rent cap in the group policy is 8k / night; but your actual rent for room in the hospital was 10k / night. Then all your bills would be scaled down by a factor of 0.8, by insurer, and not just the room rent.

  Out of 2L, insurer would at most pay 1.6L (= 2L x 0.8).

• Group policies could have a co-pay clause. Even if they don’t have it this year for your policy, they might next year when policy is renewed. It's common in most firms, or corporates, to negotiate for better rates with new insurers, every year. TPA for the insurance remains same, but actual underlying insurer changes frequently. New insurers come in with new clauses.

• The coverage of the group policy ends immediately, if the employee resigns or is terminated. You and your family will be without coverage in the transition period between jobs.

Verdict ⚖️

Group health insurance is adequate when you’re starting out in your career, do not have dependents, and are relatively healthy (confirmed by an annual health check) or less likely to fall ill.

You can have two options here:

• Continue with the group cover alone, hoping that you won’t need additional health insurance in the near future.

• Buy an additional individual/family floater plan, in personal capacity

Biggest risk in depending solely on the group cover, is that any illnesses that you or your family members later develop could result in a significantly higher premium for a floater plan or an insurer declining to underwrite your policy.

If you have an additional individual/family floater policy:

• You can use the group cover for minor hospitalizations.

• After 3-4 years, the waiting period for any pre-existing illnesses would be over and subsequent hospitalizations due to these PED’s will be covered in your personal Individual / Family floater plan.

• You and your family will have a health cover if you decide to take a sabbatical or during a transition period in-between jobs.

• You can also buy a super top-up plan using the floater plan sum insured as a deductible.