Supplement employers COVER with one of your own

Written by Suneeti Ahuja | Updated: Nov 10 2008, 19:58pm hrs
Depending merely on the health insurance provided by your employer means you are flirting with danger. Heres why you also need a personal cover, and points to keep in mind while buying one
Health insurance is a complete no-no when people are in their twenties or thirties, a possibility when they are their forties, and an absolute necessity when they are nearing their sunset years. This is the general perception and practice within society. Moreover, while we are earning, especially when employed, we rely solely on the health insurance provided by the employer. Group covers are certainly more beneficial as most of them cover normal exclusions (coverage in case of disease or illness during the first 30 days of the policy), allow maternity expenses, and also cover pre-existing diseases.

But is the health insurance cover provided by your employer enough In this era, when there are opportunities galore and people switch jobs faster than in their parents generation, and when hire-and-fire policy is a reality and not merely something that one hears and reads about, relying solely on the health insurance policy provided by the employer can spell trouble.

Cause for worry
Whether you have been retrenched or are moving on to greener pastures, as soon as you move out of the ambit of your present employer the insurance cover provided by it ceases to exist. Should something happen to you in the interim after quitting the old organisation and before joining the new one, you are left to your own devices. The coverage ceases as soon an employee leaves the company. Normally there is no portability from a group cover to an individual cover. However, some companies might decide to give this facility on individual basis, says Sanjay Datta, head of health insurance at ICICI Lombard General Insurance.

With ever rising medical inflation defined as the cost of getting treatment, cost of medicines and hospitalisation it is becoming harder to get good medical treatment. Medical inflation today ranges between 12 and 15 per cent. With rise in lifestyle-related diseases (diabetes and heart disease) and cost of medical care, you cannot afford not to have adequate health insurance, says Alda Dhingra, vice president, Prudent Insurance Brokers.

Moreover, most employers do not take coverage depending on what current medical costs are. They take coverage depending on what their budget is, and what discount they are getting from the insurance company. Hence, a lot of times the cover that you get from your employer is not adequate. No employer will give you a cover of more than Rs 2 lakh for the entire family. And if that is the case, the way medical costs are rising it is quite possible that you may have to use your personal medical policy to tide over the expenses incurred, says Rahul Aggarwal, chief executive officer, Optima Brokers.

What to do
At present there is no institutionalised arrangement by which a group insurance cover can be converted into an individual cover. However, a few insurance companies might offer you this facility if they are intimated well in advance. Explains Aggarwal: When you leave your present employer, ask the insurance company to give you medical insurance based on what you were already enjoying. Based on the claim history, you can ask for a lot of things like roll over of claim-free years, inclusion of pre-existing diseases, if any, and other clauses. However, this has to be done within seven days of getting your name deleted from the group cover. This is a good way of ensuring good coverage. Unfortunately, not many people know about this. In the trauma of getting laid off or the joy of joining a new organisation, people often forget about health insurance.

Even if such portability from group to individual policy exists, you still need an individual cover. The first and foremost reason, as mentioned earlier, is the protection you get during times when you are between jobs. Secondly, it is likely that you will make use of the health insurance provided by the employer first and only in dire need resort to the individual cover. In such a scenario, the claim-free years that you accumulate in your personal policy will work in your favour. The claim-free years will translate into lower premium rates and you will also enjoy coverage for pre-existing diseases (which is usually offered four years after the occurrence of a disease in a policy). One should always maintain an individual or family policy even when one is employed to ensure that one accumulates claim-free years and to enjoy coverage for pre-existing diseases, says Dhingra.

Points to remember
If you are yet to buy an individual cover, and are joining a new employer, here are a set of things that you might want to find out. As lack of adequate health insurance can cause you financial trouble, ask your employer the following: the sum assured you are likely to be covered for, whether parents will be covered by the policy, and whether pre-existing diseases will be covered. This will help you assess how much individual cover you might need. First assess whether the cover provided by the employer is adequate. More often than not, employers do not provide adequate cover. People should also be cautious. One of the things they can perhaps explore at the interview stage is whether their parents will be covered in the policy or not.
This is because your parents are more likely to have pre-existing diseases rather than you, says Binay Agarwala, head of health insurance, ICICI Prudential Life Insurance.

The amount of coverage that you buy in your personal cover should depend on the type of city you live in. In a metro one should have a cover of at least Rs 5 lakh sum assured, and in a non-metro, at least Rs 3 lakh. This is because of the difference in healthcare costs from one city to another, Agarwala adds.
If you are changing insurers, see whether they will honour the claim-free years you have accumulated so that you get pre-existing diseases cover in the new policy. If you have dependant parents, try to get them covered under your family policy, or make sure they buy policies at as early an age as possible. As they get older, it becomes more difficult for them to obtain coverage.

Wholesome cover
Any disease or illness not only brings with it physical and mental pain but also financial strain. Therefore, besides an individual mediclaim policy, it is important to have a critical illness policy and a defined hospital cash policy to provide funds at the time of hospitalisation.
If you have money, you should supplement your health policy with a critical illness and a defined benefit hospital plan. These plans mitigate the risk and make the cover holistic, says Datta.

According to Aggarwal, a person should have three covers. High value personal accident cover is a must as a normal cover will not pay for loss of income incurred, and more importantly, will not cover OPD (outpatient department) cost. If a person has a personal accident cover along with a mediclaim policy, then it is a wholesome policy. These will cover you for OPD as well as IPD, for accident, and for any disease or illness. They will also cover you for loss of pay due to accident. The best part is that personal accident cover is very cheap, he says.

Dont judge the policy by its pricing. While there are various parameters to look at before taking a policy, the first and foremost should be the financial health of the insurer. Due to tough competition, the industry has seen a steep fall in premium rates. Several insurers are learnt to have lost quite a lot of money. Take for instance Healthwise Gold, Silver and Standard policies introduced by Reliance General Insurance in 2006. These were the lowest priced policies in the market, but eventually the company withdrew its Gold plan earlier this year (around April/May) as claims were very high. The financial health of the insurer determines his ability to pay claims. Will he exist tomorrow to pay your claim Be sceptical of the lowest-priced product and check the credentials of the insurer. If you cannot renew a product that is discontinued due to high claims ratio, you will have to start your search all over again, says Dhingra.
Finally, while enjoying the cover provided by your employer, do buy one of your own to avoid undue financial hardship. And the earlier you buy, the more claim-free years you will accumulate, which will in turn help you enjoy a lower premium rate.

Checklist for your health cover
Medical inflation ranges between 12 and 15 per cent
Health insurance cover provided by your employer is valid only till the time you work with that organisation
Buy health insurance at an early age to accumulate claim-free year bonuses, and to in turn lower premium
Amount of coverage that you buy in your personal cover should depend on the type of city you live in
People staying in metropolitan cities should have a cover of at least Rs 5 lakh
In case of smaller towns, a cover of Rs 3 lakh should suffice
When opting for a new job find out the sum assured of the employers cover and whether or not the cover includes pre-existing diseases
If you are changing your insurer, check whether the new one will honour the claim-free years that you have accumulated so far
However, till the time mediclaim portability becomes a reality, it is advisable to stick with one insurer