Health insurance is the most preferred type of insurance after the Corona pandemic hit the World. The need for a proper health insurance has been on the rise for the past one year and most of the people prefer to have a health insurance policy which covers their medical costs. Keeping in mind the medical costs associated with the Corona treatment and the need for special health insurance product IRDA has at first asked the insurance companies to cover the medical costs incurred for corona under all the health insurance policies without any exception. Later IRDA has drafted a separate health insurance policy named Corona Kavach and Corona Rakshak policies which cover the medical costs incurred even if the treatment is taken at home.
Corona has created awareness among the people regarding the health insurance policies. The health insurance sales have gone up and crossed the motor insurance sales for the April- September period which was during the lockdown phase. One of the main reasons for this could be the postponement of motor insurance renewals during the lockdown period by many people and the other reason could be the need to have a health insurance policy to save them from facing dire financial consequences if contracted with Corona virus. Since the Corona pandemic was new to Indian society, there was no standard charges specified by the government and hospitals charged crazily during the initial stages.
Most of the working professionals are covered under the Group Medical Insurance offered by their employer and other self employed people have opted for Individual or Family Health insurance policy which covers the medical costs associated with diseases and illness. Few companies provide group health insurance by collecting the premium from the employees while making it voluntary to join the group health insurance policy while some companies provide group health insurance to their employees as a part of their CTC. In such cases it would be difficult for employees to decide in which health insurance plan they should join. Company offered health insurance or purchase Individual health insurance?
Let us understand the difference between having an Employer sponsored health insurance and Individual health insurance:-
Definition:
As the name suggest Individual health insurance or Family health insurance is the insurance policy in which the Individual purchases for themselves or for a their families. Though the name contains Individual it doesn’t necessarily mean that the policy covers a single person or an individual. The premium charts in Individual health insurance policies or Family health insurance policies are designed and available readily to be selected from. The Sum insured and age wise premium are prepared by the insurance companies, the premium might change depending on the type of add-ons selected under the individual health insurance or family health insurance.
Group health insurance is the insurance plan in which an organization purchases it for their employees. The group health insurance may also include the family and parents of the employees on payment of extra premium. Group health insurance policy premiums are subject to change depending on the age of the group, number of members covered in the group, previous claim ratio, corporate buffer selected etc. The group health insurance premium needs to be calculated most of the times by the insurance companies as the requirements might be different for each organization.
In patient Treatment:
In patient treatment is when a person goes to a hospital for any disease or illness related treatment and get admitted there for more than 24 hours. The treatment could be for any kind of illness or disease which is covered under the health insurance policy. The inpatient treatment includes the cost of operation or surgery, doctors fees, medical equipment used for treatment, attendant’s fees etc. The Group health insurance as well as the Individual health insurance or Family health insurance covers the inpatient treatment costs up to the sum insured mentioned in the policy copy.
Maternity Benefit:
One of the main reasons to opt for Group Health insurance is the Maternity benefit available under it. While the Individual or Family health insurance policies have a waiting period of at least 9 months, a group health insurance policy provides maternity cover from day 1. All the individual health insurance plans have a waiting period which ranges from 9 months to 3 years before claiming for maternity. Few insurance companies offer the maternity cover as an add-on while the other insurance companies provide the maternity cover in built in the basic individual health insurance policy.
No Claim Bonus:
No Claim bonus as the term indicates is the bonus given to the policyholder for not making any claim in the previous policy year. The No claim bonus in health insurance is given as a percentage increase in the base sum insured under the policy. The sum insured is increased by a definite percentage each year if there are no claims reported in the previous year. Extra premium is not charged by the insurance companies for offering the No Claim Bonus to the customer. NCB is considered as the way of rewarding the policyholder for not making any claims in the previous policy period.
NCB is not applicable for Group health insurance policies as the coverage is provided to a group. No claim bonus is applicable for Individual health insurance policies at the time of renewal subject to nil claims reported in the previous policy period and renewal done before the expiry of grace period. There is no concept of No Claim bonus in the Group health insurance policy as there would be some or the other claim in the Group health insurance plans due to the number of lives involved. No claim bonus in Individual health insurance plans is subject to nil claims in the previous year and a maximum of 150% of the sum insured can be offered as the No claim bonus.
Grace Period:
Grace period is the period of time provided to the policyholder to continue the benefits under his/her health insurance policy without lapse. Grace period is the time you get to make payment to renew your health insurance policy after the expiry date, insurance companies usually provide a grace period of 15 days from the date of policy expiry after which the accrued benefits under the existing health insurance policy will be lapsed.
Individual health insurance policy or Family health insurance policies have a grace period of up to 15 days which would be mentioned in the policy document. All the benefits under the policy would stay intact during this period and once the payment is done within the grace period the policy continues. The grace period in the individual health insurance provides an opportunity to the policyholder to withhold the benefits by paying the premium on time. Once the grace period is over the health insurance policy lapses and all the benefits attached to that particular policy will expire. For instance, if a policyholder has accrued 100% NCB on his/her health insurance policy and if the renewal premium is not paid even after the grace period the health insurance policy lapses and the NCB will be lost.
In case of Group health insurance there is no concept of Grace period where the policy renewal should be done before certain period. Group health insurance doesn’t carry any No claim bonus and other benefits which can be accrued on subsequent renewals. Since the grace period is not present in the Group health insurance policy, there is no chance of losing the benefits if not renewed before the expiry period. A group health insurance policy is considered as a fresh policy each year by the health insurance underwriter and the terms and conditions under the policy might change each year depending on the requirements of the client.
Cost:
The cost of health insurance treatment is on the rise these days due to the technical advancement in the medical field and the even the complicated surgeries and treatments are performed within a short period of time. The rising health care costs are pushing many people to purchase an Individual/ Family health insurance policy or join in a Group health insurance policy.
The cost of Individual/ Family health insurance policy depends on the age of the elder member, sum insured chosen and add-ons selected. The premium under the Individual / Family health insurance plan is to be paid by the policyholder. Family floater option is the most preferred type of plan in the Individual or Family health insurance plan where the parents can also be added.
The cost of Group Health insurance policy depends on the previous year loss ratio as well as the age of the group and the sum insured selected for that particular year. The cost of the Group health insurance increases exponentially with the Claim ratio, higher the claim ratio higher would be the cost of the Group health insurance policy. In general the premium under the Group health insurance policy is paid by the Employer and may or may not recover from the employees. This practice varies from company to company, some companies charge the premium from employees to include parents while some companies charge premium to include the employees in the Group health insurance policy.
| Subject |
Individual/Family Health Plan |
Group Health Plan |
| Maternity Benefit |
Need to wait for at least 9 months to claim Maternity Benefit |
No waiting period for Maternity Claim |
| Cost |
Depends on Age & Sum Insured selected |
Depends on previous loss ratio, age & sum insured selected. |
| Waiting Period |
Pre existing waiting period, Specific disease waiting period & Initial or 30 day waiting period should be satisfied |
No waiting period. Day 1 coverage available. |
| No Claim Bonus |
Applicable for each claim free year |
No concept of No claim Bonus in group health insurance policies. |
| Grace period |
Grace period of 15 days available under the Individual or Family health insurance plans to make the payment before the lapse of benefits. |
No concept of Grace period in the Group health insurance policies. |
| Portability |
Portability can be done by submitting application 45 days prior to the new insurance company. The decision to accept or reject the proposal would vest with the insurance company. |
No need for portability in case of Group health insurance. New policy can be taken at the time of renewal from different insurance company. |
| Midterm Additions /
Deletions |
Permitted subject to realization of premium. |
Permitted subject to realization of premium. |
Portability:
Portability in Health insurance means the transfer of your health insurance policy coverage from one insurance company to the other without losing on the credit which was gained in terms of pre existing waiting period, specific waiting period and others. The portability under health insurance was permitted by the IRDA in the year 2011 to help the policyholders carry the benefits of existing policy with the new insurance company. Health insurance portability can be done by the policyholder by submitting an application to the new health insurance company with all the details as requested by the insurance company.
Portability of health insurance is permitted in case of Individual or Family health insurance plans. Policyholder willing to port his health insurance policy should submit an application to the new health insurance company 45 days prior to the expiry date along with the other required details. The new health insurance company will provide the plan which matches with the existing individual or family health insurance plan of the policyholder. The premium in the new health insurance plan could be slightly greater or lesser than the existing health insurance plan which varies from one health insurance Company to the other.
In case of Group or Employer health insurance plans the portability option would not be valid as there would be no benefits under the Group health insurance plan which would be carried onto the new health insurance company. Group health insurance plan can be renewed with different insurance company after or before the expiry of the current health insurance plan.
Pre-Existing diseases:
Pre existing disease is a condition, ailment or injury that is already present at the time of taking health insurance policy. To prevent people from taking undue advantage by taking insurance only at the time of treatment, IRDA has proposed to include waiting period for the illness or diseases which are already present before the commencement of the health insurance policy. The pre existing diseases include Blood pressure, Diabetes, Thyroid, Asthma etc. which are very common in many Indian households. Pre existing diseases can have a waiting period of up to 4 years depending on the health insurance products and the insurance company.
Individual/ Family health insurance plans in India have a typical waiting period of 2 years which can increase up to 4 years depending on the type of health insurance plans and the insurance company. Any pre existing disease that existed before the inception of your health insurance policy will have to satisfy the waiting period before being eligible for health insurance claim. Any illness or disease resulting from the pre existing disease may also be exempt from claim being payable by the insurance company.
The biggest advantage of Group health insurance is the Waiver of Pre existing and other waiting periods during the policy period. One need not wait for any period of time under the Group Health insurance policy to claim as there would be no waiting period for any existing and some specific diseases. In Group health insurance policy even the initial waiting period or 30 day waiting period is waived off by the insurance companies. Group health insurance could be beneficial to the people have pre existing conditions and other illness which could not be covered under the Individual/ Family health insurance policies before satisfying the waiting period.
Additions/Deletions:
Additions/ Deletions of members in the health insurance policy can be done at any point of time in the policy year on payment of extra premium depending on the type of the health insurance policy and the insurance company terms and conditions. This is known as midterm additions or deletions which should be informed to the insurance company within the stipulated time period set by the insurance companies.
In the Individual or Family health insurance plan the midterm additions or deletions are possible depending on the type of health insurance plan chosen. Extra premium has to be paid in case of Additions to the insurance company and in case of Deletions Premium would be refunded by the insurance company. Intimation for addition has to be made to the insurance company immediately in case of marriage or child birth so that the same can be endorsed in your policy copy.
Group health insurance policies also permit additions and deletions of members or employees subject to the premium available with the insurance company and the premium paid by the insured. In case of additions employees had to intimate the insurance company within 45 days of joining the organization and the same goes with the deletions. If the insured Employer is maintaining sufficient Cash Balance with the insurance company, then the newly joined employees would be covered from the date of joining Else the date of payment received by the insurance company would be considered as the risk start date.
After Retirement/ Job Loss:
Health insurance policy would be handful at the time of retirement as the age of the person would be near to 60 and the chances of getting hospitalized would be on the higher end. It is equally important to have a health insurance policy active at any point of time so that you can prevent yourself from the debt trap. Group health insurance policies would only be active as long as the employee is associated with the company, once the employee moves out of the organization the group health insurance cover would be inactive and any health claim has to be borne by the employee. If any mishap happens during the gap of employment where the Group medical policy of the previous employer is expired and the Group Health cover of new employer is yet to be active, then the cost of health treatment has to be borne by the insured.
If you think that you do not need an Individual or Group Health insurance policy till the time of your retirement, then it is the biggest mistake you might commit in regards to your financial planning. It is important to note that after retirement, one can take Individual or Family health insurance plan but the waiting period needs to be satisfied before you can utilize the plan. Also the premium to be paid at old age for any health insurance plan would be more comparatively.
Is it OK to neglect Individual health insurance if you are covered by your employer?
Group health insurance coverage provided by your employer would be active only till the time you serve the company, once you are out of the company you would be exposed to the risk of financial crunch in case of any medical emergency. It is highly advisable to take Individual or Family health insurance plan even though you are covered under Employer or Group health insurance plan. Having a Individual health insurance plan from a very young age can have great number of advantages such as Satisfying the waiting periods, Extra health insurance coverage etc.
Health insurance from Employer is temporary and during these turbulence times there is no guarantee of the employment and it is in the best interest of the customers to have an Individual or Family health insurance plan in addition to the Group health insurance plan. If you have to pay premium to join the Group health insurance plan then it is better to opt out and invest the same money to purchase an Individual health insurance plan.
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