Individual vs group plan: Is it beneficial for working individuals to have two health insurance policies?

IRDAI mandates ease of portability from group to individual policy as per the employee’s decision, especially at the time of leaving the company.

Health insurance is an important part of your financial planning as one needs a proper healthcare from a preferred hospital, specialised doctors to modern infrastructure.

There’s a high chance for working professionals to have at least two health insurance policies, one offered by the employer and the ongoing individual or a family floater plan. Group health policy is offered to employees by a corporation, whereas, individual and floater plans are purchased in a personal capacity.

A few corporations do provide the option to opt-out from the group policy if you already own a health plan, but it does not necessarily mean that you should. The insurance regulator, IRDAI guarantees policyholders to claim benefits from numerous insurers by ensuring expenses are covered without duplication.

“Having dual or multiple health plans can improve one's overall health coverage and financial stability provided appropriate disclosures and coordination between insurers are ensured,” said, Manish Dodeja, COO of Care Health Insurance.

Also read | Moving from group health to individual cover without losing benefits

What could possibly go wrong, and how to avoid?

The premium paid on group health policy is deducted by the employer every month from your salary, which is a mandatory component under deductions. In contrast, premiums for individual and family floater health plans are paid in lump sum though many insurers give the option to pay the amount monthly.

However, if you think you can bring two health insurers together to settle your claim, and there’s freedom to choose from any health plans, managing both could be a cumbersome process. Choosing one policy or insurer at a time on a per hospitalization basis would be one way of resolving the issue.

“In the case of hospitalization, you first utilize one policy. If the admissible amount does not cover the full expense, you can then claim the balance under the second policy as per the policy terms and conditions,” Dodeja said.

Insurance analysts advise on producing all health policies before the hospital admin if you own multiple health plans. Most hospital’s admin may help in choosing between plans you own, while doctors give an estimate of cost that may incur during hospitalization.

Also read | Digital Life certificate made easy: Pensioners can submit Jeevan Pramaan without bank visits — here’s how

Portability from group to individual policy

IRDAI mandates ease of portability from group to individual policy as per the employee’s decision, especially at the time of leaving the company. This is done to ensure continuity of benefits even if an individual already owns a health plan. Employees should inform the insurer about the decision at least 30 to 45 days prior to leaving the organization. However, there might not be flexibility to extend coverage or add riders. In that case, buying a new policy may serve better, depending on one's requirement.

Affordability and sum-insured

It is best to make use of group policy if the hospitalization cost falls under the sum insured amount, which usually ranges from Rs 3-5 lakh. Individual and family floater plans have the benefit of no-claim bonus (NCB), which increases the sum-insured amount by a certain percentage upon renewal of the policy.

Group policy by employers is usually affordable with options to add a spouse, and premiums are paid on monthly frequency. Individual and family floater plans offer higher flexibility in terms of coverage customization, like out-patient department (OPD) consultation, though premiums are paid upfront in a lump sum.

“Dual health coverage helps individuals to manage healthcare costs more efficiently and control high medical costs, and also greater flexibility in accessing a larger network of healthcare providers. However, group policy typically provides limited coverage, whereas an individual health cover ensures continued comprehensive protection even in the case of a job change or retirement,” said Dodeja.