Kapil Mishra is a family man, with a wife, two kids— aged five and three years old. He is working in an engineering company as a Senior Mechanical Engineer from the last few years. His company is covering him and his family under corporate health insurance. Though Kapil has not incurred any major medical expenses till now; he is confident that in case there would be a requirement, his employer health insurance would help him.
However, Kapil is making a big mistake by relying only on corporate health insurance. Although his medical expenses are negligible till now, time will change. The chances are high that there will be a time when employer health insurance will be insufficient.
Like Kapil, many people rely only on the health insurance offered by their employers, and thus, shun the idea of purchasing individual mediclaim policies. However, what they fail to recognise is that our changing lifestyle and soaring medical expenses and inflation may make it necessary to purchase an individual health insurance plan.
So, is it a wise decision to rely only on a corporate health insurance policy? Is it necessary to purchase an individual Mediclaim policy? Let’s try to find the answers to these questions.
What Is Covered Under Corporate Health Insurance?
It is group insurance which covers a certain number of members under a single policy. If an employer offers it, then it covers all the employees of the company. Besides offering benefits like pre-existing ailment and maternity coverage, a corporate health insurance policy can also be extended to cover family members as well.
What Is Covered Under Individual Health Insurance?
It is an insurance policy which a person purchases for itself or their family. Unlike corporate health insurance policy, here premiums are paid by an individual who can customise the policy as per his/her needs. In case the policy covers family members as well, it is known as corporate health insurance. Here, premium rates depend on the age and health state of an individual.
Corporate Health Insurance Vs. Individual Health Insurance
- Cost: While, some companies offer corporate health insurance at free of cost, the others charge nominal premium rates. However, the premium of individual health insurance can vary between Rs 6,000 and Rs 8,000 for Rs 5 lakh coverage. Moreover, the insurance premiums of a group health insurance are deducted from the salary of the employee (in case, the employee is also paying premiums) as opposed to individual plans, where premium is paid
- Waiting Period: While, corporate health insurance covers pre-existing ailments right from the day one, there is a waiting period of, say, three or four years, before they are covered under an individual health insurance policy.
- Underwriting: In case of a corporate health plan, an employer accepts all employees, irrespective of what their age and health conditions are. It means all employees are covered from Day 1 of their job. However, in individual health insurance, insurer carefully scrutinizes the application and approve or reject it accordingly. Here, the applicant’s age and health condition play a crucial role.
- Customization: As employer health insurance is bought by a company, its coverage is decided by the employer. It means, employees can’t choose the cover as per their choice. An individual health insurance on the other hand, can be customized by an individual.
- No Claim Bonus (NCB): In the insurance field, the insurer rewards those policyholders who don’t make a single claim in the policy tenure. An NCB can help you get additional cover at low premium rates. As corporate health insurance is purchased by a company, you don’t get any no claim bonus (NCB) if you don’t make a claim. However, if you have an individual health insurance policy, you are eligible to get NCB if you don’t make a claim.
- Tax Benefits: In addition to offering protection against high medical expenses, a Mediclaim insurance policy is also eligible to get tax benefits. The premiums paid towards a health insurance policy are tax-free. However, in a corporate health insurance plan, all insurance premiums are paid by the employer, and therefore, the company gets tax benefits. On the other hand, premiums of an individual health insurance policy are paid by you, and therefore, you can get tax benefits.
Is Corporate Health Insurance Sufficient?
Though corporate health insurance is offered at free of cost or at sometimes, the nominal amount is charged, the chances are high that this insurance policy may not be sufficient due to the below reasons:
- Cover for Parents: It is not necessary that your corporate health insurance may cover your dependent parents. It can create a huge financial gap because elder people usually requires frequent medical care.
- Sum Insured: Sum insured or coverage available under corporate health insurance is limited, which can vary anywhere between Rs 3 lakh and Rs 5 lakh. Considering the current medical inflation rate, this coverage is insufficient to meet hospitalisation expenses. In addition to this, there can be a cap on room rent and surgeon fees as well, which further trim the medical insurance coverage.
- Out-Of-Pocket Expenditure: Many employer-sponsored health insurance policies come with additional clauses, like co-payment and deductible. It means, at the time of claim, the insurer will not settle the entire claim and a certain portion has to be paid by the policyholder.
- Job Switch: As corporate health insurance is attached to your job, you will lose this benefit as soon as you change your job. It is not necessary that your new employer will offer you health coverage.
- Post Retirement: In most of the cases, retirees are not covered under corporate health insurance plans. However, with an increase in age, medical expenses also rise. At that, you will have to bear medical expenses.
- Change in Company’s Policies: As health insurance is offered by an employer, it works on the whims of the company who can tweak it as per their interest. In many cases, the employer can also stop or lower the cover, and no employee can object it.
It is essential to purchase a standalone health insurance plan that will remain with you, irrespective of your job status. Consider corporate health insurance as an additional benefit only.
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