Company health insurance might not be sufficient for you and your family—here’s why

When Aravind’s mother returned from the hospital after undergoing treatment for 10 days at a private hospital for the novel coronavirus, the relief that washed through him evaporated soon when he came to know about the hospital bill. Aravind, who had been working as a senior manager at a top-notch MNC, had harboured the notion that the company’s health insurance policy, which provided coverage for him and his widowed mother, would be enough to keep them from going bankrupt in the event of a medical emergency.

In reality, Aravind ended up paying a substantial amount from his own pocket. The insurance policy provided by his company was only worth Rs 5 lakh and the total amount came out to be much more than that. He realized that it had been a mistake to rely solely on the corporate health plan and that he should have opted for a separate health insurance plan with sufficient coverage as well.

Insurance penetration remains abysmally low in India. In the fiscal year 2018, the insurance penetration in India was 3.7 percent of the gross domestic product (GDP), as against the global average of 6.31 percent. Most people underestimate the importance of insurance and tend to relegate including it in their financial plans until they reach an age where visits to the hospital become more frequent. This also explains why health coverage provided by employers is deemed as adequate by many employees, who do not consider seeking additional health coverage.

Although there are undeniable advantages of the medical insurance provided by your company for you and your immediate dependants, it may offer limited coverage. Here is why you should consider getting independent health insurance coverage, besides the corporate health plan.

Insufficient coverage

People are living longer and the relentless rise in medical inflation coupled with the burden created on the healthcare infrastructure by the pandemic has given rise to a situation where one medical emergency can become a major financial setback. This has amplified the need for high health insurance coverage and, sadly, most corporate insurance plans do not provide that. Insurance provided by group policies are generally worth Rs 10 lakh or less, which isn’t much for a family. The number of dependents may also be limited, which means your entire family may not have any insurance cover at all.

Restrictive clauses

Many corporate health plans have the room-rent capping and the co-payment clauses, both of which can cause you to shell out money from your bank account for medical care facilities. Under the co-payment clause, a fixed percentage of the medical bill needs to be paid by the policyholder and the insurer is only liable to pay a fixed percentage. The room rent-capping means the insurer will only pay up to a certain amount towards room rent in a hospital and should you choose a higher tariff room, you will have to bear the differences in the cost. By opting for a regular policy you can choose one that has a minimum or no co-payment clause and provides higher coverage for hospital room tariffs. Sub-limits on hospitalization, diagnostic tests, and ambulance charges are also common in group policies.

Lack of flexibility

The fact that your entire family may not be covered by corporate policies is an indication that ultimately, it is the employers who negotiate all the aspects of group policies including diseases covered, critical illnesses, inclusion of dependents and the sum insured with the insurer. Should you or any other member of the family have a history of any critical illnesses, there is little chance that the corporate policies will have you covered.

Besides the policy clauses, it is important to remember that the power rests with your employer when it comes to providing continued health insurance coverage. If your employer defaults on the premium payments or terminates the contract, you will be no left with no insurance coverage.

A group health policy is one of the many benefits that you get by virtue of your association with your employer. If you switch jobs or if the employer decides to shut shop or terminate your services, you can no longer reap any benefits from the group policy. Even if your new employer provides health insurance, you may have nothing to fall back on in the absence of a regular policy in case of a medical emergency. You never know when you would need the protection offered by a health insurance policy and having an additional cover is a wise decision for these gap periods.

Perks of a regular health policy

While there’s no reason not to reap benefits of any free or inexpensive insurance provided by your employer, thinking of it as a complete solution for your healthcare needs may not be a wise decision. The biggest advantage of having a regular health insurance policy is that you get to choose based on your and the needs of your loved ones – you can ensure the coverage is sufficient, the clauses are appropriate, you can avail tax benefits and, most importantly, you can revise it from time to time. After all, you would know best about your health and that of your loved ones and not your employer. So, go ahead and buy health insurance online to safeguard your finances during emergencies.