We often
delay buying an individual health cover assuming that our employer’s group
health cover would suffice to meet our medical requirement. What we fail to
acknowledge in process is our changing lifestyle, inflation and rising medical
costs that may exhaust our savings, in case we don’t have sufficient medical
coverage. Also, let’s not forget that obtaining medical insurance policy would
cost us more as we grow older. So, is it really wise to exclusively rely on
group health cover? Does it make sense for us to sign up for an individual
health plan at all? Let’s look at what group and individual insurance entails:
What is
covered under group health insurance plan?
You and your family will be covered under group health insurance
plan as soon as you begin working with a corporate organization. Simply put,
group health plan takes care of medical treatment and hospitalization expenses
in case of an emergency. Besides provisioning for pre-existing illnesses and
maternity expenses at nominal rate, group insurance plan today, comes with an
option to enhance health coverage by paying additional premium, with voluntary
Top-Up plan.
What is
covered under individual plan?
As a salaried person, you would be covered under your company’s
group health insurance plan. Although it provisions for most of the medical
treatments and emergencies, the question that arises is whether it is adequate.
This is where an individual health plan or family floater plan comes handy. It
offers additional benefits to people who are already covered under the group
health plan and otherwise too. Unlike group health plan, you can customize your
health insurance policy by opting for an add-on cover or Top-Up and Super
Top-Up plan, as per the life-stage that you are in.
How does
a group health plan fair vis-à-vis individual health plan?
The basic distinction between a group health plan and an
individual health plan is that while the former is employer owned and
controlled, the latter is owned by the individual. Though both provide a
similar cover, yet there exists few key differences between the two. Let’s examine them:
Premium: Group health insurance plan is cheaper than
an individual or family floater plan as the risk for the insurance company is
spread out over a group of people. However, in individual health plan, your
premium outgo can be anywhere between Rs.6000-8000 for sum insured of Rs.5lacs.
Waiting
Period: While
group policy covers diseases or medical treatments right from day one, there is
a waiting period that you have to bear before you are covered under individual
health plan. This can be anywhere between 3-6yrs, depending on the insurer and
your medical history.
Pre-existing
diseases: Group
policy covers pre-existing disease right from day one, while there is a waiting
period of 3-4 years before these are covered by individual policy. Insurers
generally levy certain loading charges and co-payment clause in case of
pre-existing illness. In addition to this, you may have to settle for higher
premium outgo depending on the nature of your illness.
Also, it will be difficult for you to qualify for an individual
health plan if you have pre-existing illness, especially if you happen to be in
the advanced stage. This can be challenging if you decide to leave your job or
take a sabbatical.
Underwriting: Every person who applies for group health
policy is accepted under the plan, irrespective of his age or health condition.
In case of individual health plan, insurers can accept or reject your
application depending on your age, income, lifestyle and medical history. They
may even ask you to pay higher premium or clear part of the total medical
expense out of your own pocket, as per the ‘risk factor’ involved.
Customization
of policy: A group
health plan cannot be customized beyond a certain point as it is up to the
organization to choose a plan for its employees, depending on its employee count
and overall budget allocation. Your individual policy on the other hand, can be
tailor-made to suit your requirement.
Portability: Individual health plan provide you with an
option to switch between two plans, insurers and even zones (between regional &
all-India coverage) while carrying forward the benefits accrued on previous
policy. As per IRDAI regulations, you can now port from a group health cover to
an individual health cover at the time of retirement or job change.
Tax benefits: You cannot claim tax benefits on group health
plan. On the other hand, you will be eligible for claiming deduction of
Rs.25000 & Rs.30000 (senior citizens) respectively, under Section 80D of
the Income Tax Act.
How
should you choose between the two?
You may not necessarily require a standalone health insurance plan if you are adequately covered under the group health scheme. If you happen
to be married and in your late 20s, you must have a minimum sum insured of
Rs.5lacs, irrespective of whether (or not) you are insured under group or
standalone scheme. However, be wary of the fact that your group insurance would
be null and void if you are currently in-between jobs or planning to start your
own venture. And this is exactly why you must consider buying a standalone
health plan. It is like a strong safety net around you and your family.
Consider buying it if you feel your group health scheme is not sufficient
enough to meet future requirement.
