Faced with rising healthcare costs as well as inadequacy of coverage provided by a single policy, a large number of people these days are opting for multiple health insurance policies. After all, why to take risk when one can afford multiple policies?
This usually happens in cases where the health cover provided by one’s employer is not adequate for the entire family and there is need for additional cover. Or, when additional coverage or policies are needed because of some other reasons.
Why do People Choose Multiple Health Insurance Policies?
People have their reasons to choose additional policies for themselves and their family members. The most frequent reasons are:
* Inadequate coverage on the policy provided by the employer
* An old policy that does not match up to the existing ones
* Need for separate policies for each family member (parents, children, and spouse)
Having a personal health policy is also helpful in cases when you loose or change your job because your current employer will provide health insurance cover only till the time you are employed with them. But that is not the case with your personal health insurance, which you can continue life long or as long as you wish.
However, “while there are many advantages of having multiple health policies, they are more beneficial only if used effectively. Also, the claims should be made the right way and a person should know which policy to use first,” says Naval Goel, CEO & Founder, PolicyX.com.
Group Cover & Personal Insurance Policy
Both group plans and individual health insurance plans provide the necessary primary coverage, but they have notable differences. Group guarantees are cost-effective, but personal insurance provides better coverage.
“Group insurance is something that is offered to an employee by his employer. The cover provided in this kind of coverage is uniform for all members. The premium amount is calculated based on the summative risk factor of all the members of the group. Group insurance is also used by members of associations or clubs. The policy expires once the person leaves the group or the company,” says Goel.
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In a personal insurance plan, the policy serves as an asset. Several factors are considered in determining the premium amount, and it is fixed before the purchase of the scheme. The customer’s age, income, health impairments and medical history of the family are considered. The policyholder can decide the tenure of the policy as per his convenience and can even purchase additional riders for extra coverage.
Both the plans have their benefits and constraints. An individual policy gives you a lot of independence to customize the plan according to your needs. A group insurance policy is advantageous, and it is paid from your employment benefits.
When to Make a Claim
Making the decision which insurance plan to use first for a claim settlement – group plan or individual plan – may seem like an effortless task, but the decision requires careful analysis. Experts, however, have a mixed opinion in this regard, and they suggest making a decision based on the scenario.
“A group health plan must be considered first for any claim settlement as there will not be any increase in the premium amount after you make a claim. In an individual policy, on the other hand, the renewal premium often gets hiked after a claim is made. Also, the process of settlement in group insurance is faster,” informs Goel.
Moreover, terms of a group policy are more flexible when compared to the terms of an individual plan, and they even accommodate existing health disorders. In a personal policy, the policyholder has to wait for a stipulated amount of time for getting coverage on existing diseases.
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Choose According to the Scenario
Out of the multiple health plans a person owns, some policies must be reserved for dependents. If the group policy covers dependents such as parents, spouse, and children, it should be reserved for the vulnerable dependents, which in many cases are the parents.
“If the group policy covers parents, the coverage will include even pre-existing diseases. This coverage is hard to find in a personal policy, and even if you find one, it would not be as cost effective as a group insurance policy. In a general sense, it is an arduous task to find an affordable policy for older citizens that include existing medical conditions,” says Goel.
The claim settlement in a group policy is also easy. If a group policy permits coverage, it should be reserved for elderly parents or other dependents for whom the purchase of an individual policy might seem difficult.
In such cases, it is wise to make a claim on a personal policy first for oneself. It would be wiser to purchase a particular policy that does not have a lower loading for a claim – the policies that do not increase the cost of premium after the claim.
Consider the Waiting Period
If the waiting period for any kind of existing illness in the personal health insurance is not over, claiming under the individual plan will be more appropriate.
For example, suppose you have to undergo treatment for disease X, and you have a choice to claim from either of your policies, but you also have an existing ailment Y, for which the waiting period expires in the short term (one or two years) in your personal insurance plan. In such a scenario, it would be advantageous to make a claim on your private health plan, provided there are no similar restrictions on your group insurance plan.
“In such a case, if you claim for disease X under the group plan and if in the same policy year, the need arises to claim for illness Y, the group plan would have been exhausted and your personal plan would not support the claim. So, it would be wiser to use your personal health plan first if the situation calls for it,” says Goel.
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Points to Remember
Though purchasing multiple heath policies is beneficial, there are certain guidelines to follow to make the claim process easier for both you and the insurance company.
* Always reveal the necessary information about your existing policy, when you purchase a new plan.
* Give information on the riders attached to the existing system as insurers need the information to conjure contribution clause, if required.
* During hospitalization inform both the insurers for your own safety.
You should, thus, choose a policy for making a claim keeping in view your current needs as well as future requirements, and also the risk factor involved. A hasty decision can cost you dearly.