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Covered under corporate health insurance? You still need your own health policy

Employers' group covers cease to exist when you switch jobs, while an independent policy is ordinarily renewable for life

April 07, 2022 / 10:59 AM IST

More than two years into the COVID-19 pandemic, virus mutations continue to trigger surge in cases across countries, brief periods of respite notwithstanding.

The latest in the list is XE, a hybrid of the BA.1 and BA.2 Omicron variants. Mumbai’s Brihanmumbai Municipal Corporation (BMC) on Wednesday said that the first XE case was detected in the city, a timely reminder on World Health Day that the pandemic is far from over.

Also read: Coronavirus variant XE: What we know so far about the variant detected in UK

The health concerns triggered by COVID-19 and ensuing hospitalisation costs have led an increasing number of India to buy or enhance their health insurance covers in the last two years.  Yet, only 3.5 percent Indians are covered under retail health insurance policies. 

Many others continue to bank on their employer-funded group health insurance covers. For many employees, this is an indispensable part of their total remuneration, as not only do such policies cover elderly parents, but also pre-existing illnesses. Beginning of the financial year is when several corporates renew their group insurance policy and it is likely that you would have received details of your corporate cover in your official mailbox.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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However, relying solely on such covers is not a wise decision. It is best to have an independent cover in place for yourself and a separate one for your parents.

Employer-funded covers come with limitations

The employer-provided cover is not forever – it is there for you only till the time you have the job or are employed with that company. The day you move, the cover ceases to exist. Your future employer may not offer adequate sum insured or exclude parents from coverage. And as you grow older, the cost of buying health insurance rises, which is why you need to buy a separate cover at a younger age.

Soon after COVID-19 hit Indian shores in March 2020, many employees had to face job losses, depriving them and their families of a health insurance cover. This, combined with humungous hospital bills, meant a debilitating blow to their finances. Though ‘the great resignation’, and not lay-offs, dominate the news cycle today, the fact remains that corporate group health covers cannot provide long-term protection.

Unlike a corporate cover, an independent policy is ordinarily renewable for life. Moreover, most employers’ policies have a low sum insured of Rs 3-5 lakh, besides restrictions such as room rent sub-limits or co-pay.

Also listen: Know the importance of buying an adequate health insurance cover

The 'ideal' sum insured

If you are in the age-group of 35-40 years and live in a metro, you can start with a cover of at least Rs 10 lakh. “The cost of healthcare in metro cities is typically higher. Depending on the kind of hospitals you are comfortable with, a Rs 7-10-lakh cover should be good enough for younger individuals, since they are less likely to be hospitalised, particularly for serious ailments, at this stage,” says Priya Deshmukh Gilbile, Chief Operating Officer, Manipal Cigna Health Insurance. However, ensure that you review this cover at least once every five years to account for your health status as also medical inflation.

The figure will be higher if you are looking to buy a family floater policy to cover multiple members. A young family of four, with the couple in the age-group of 35-40 and young kids, should have a family floater cover of Rs 20 lakh in place. COVID-19 resulted in multiple family members being hospitalised, necessitating a relatively larger floater cover. Again, look to enhance this cover every five years to account for healthcare inflation.

The sum insured is shared amongst members, as it works on the assumption that not all family members will fall sick in the same year. This is an affordable alternative to buying individual covers for each member.

A cover for elderly parents

If you buy a family floater policy, then your parents, even senior citizens, can be covered. But it’s best to not include them in your family floater. “They are likely to have chronic and critical conditions. The frequency of hospitalisation and claim amount will be higher. It is better to have a separate cover for them to ensure health cover’s sufficiency for all,” says Deshmukh-Gilbile.

If you are a senior citizen or are looking to buy insurance for your elderly parents, you must look at a sum insured as large as possible. In case it seems unaffordable, look at top-up plans or dedicated policies.

Factor in age, income and healthcare expenses

You should factor in your age, affordability, income, standard of living, place of residence (metro or a non-metro) and your family health history, among other things.

“If you are in the younger age-groups, look at a Rs 15-20 lakh cover to start with, while a family floater cover should be for at least 20 lakh. Do not start with Rs 3-5 lakh and look to increase to Rs 15 lakh over a period of time. Insurers might not be in a position to give you a higher cover later due to lifestyle diseases that you might have contracted by then,” says Dr Bhabatosh Mishra, Director, Products, Underwriting and Claims, Max Bupa.

Hospital room rents vary as per the room category you choose and other charges are linked to it. So, if you prefer premium single rooms, you will need higher sums insured.

Securenow.in Co-founder Abhishek Bondia suggests a simple thumb rule: your health cover should be equal to your annual income. “For instance, someone who earns Rs 30 lakh a year would want to go to corporate hospitals where the cost of treatment, especially that of complicated surgeries, will be far higher than what a nursing home will charge,” he explains.

The advancements in the treatment of various illnesses and rising cost of healthcare means that you should buy a cover keeping future expenses in mind.

Top-up vs single large cover

A combination of a base (regular) policy and a top-up plan will be cheaper than buying a single large cover. This is because the top-up policy is triggered only after the base cover is exhausted. If you have a base policy of Rs 5 lakh and your hospitalisation bill amounts to Rs 7 lakh, the top-up will get activated to fund the additional Rs 2 lakh. If you do not have a base policy, you will have to fund this Rs 5 lakh, termed as deductible limit.

“However, your basic claims for common ailments, including cancer, should be taken care of by the base cover. Top-up covers are meant for outlier claims – for example, complicated cases of cancer or dengue. The claim process can be cumbersome if you have not purchased a top-up from the same insurer,” explains Mishra.

On your part, take a call based on your affordability, which, say, a Rs 5-lakh base and a Rs 10-15 lakh top-up plan can offer. But, make sure you buy a super and not plain-vanilla top-up plan. The former takes aggregate claims made during the year into account, unlike a regular one, which requires a single claim to exceed the deductible limit for the top-up to kick in.

 
Preeti Kulkarni is a financial journalist with over 13 years of experience. Based in Mumbai, she covers the personal finance beat for Moneycontrol. She focusses primarily on insurance, banking, taxation and financial planning
first published: Sep 1, 2020 10:18 am
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