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Don't bank on your employer's health cover alone

24 February, 2009

It is always good to have a health insurance policy provided by your employer. Anyway it doesn't cost you anything, and may also cover your family Choose an insurance broker
members, apart from giving you protection from health risks.  However, even if you are covered under group health insurance, it makes sense to have a personal health insurance policy. For, banking only on your employer's group health insurance may cost you dearly, particularly in such times of crisis. It is no longer a secret that insurers across the globe are pulling out of contracts with a growing number of organisations. Recently, for instance, health insurance cover to the US-based employees of Satyam Computer Services was withdrawn as the company had allegedly defaulted in paying the premium to the tune of over $4 million. Something similar may happen with the staff of other companies also if their organisations fail to pay the premium in time.

Among other probabilities, "a company may become bankrupt or one's policy may get cancelled by the insurer," says Pavanjit Singh Dhingra, V-P, Prudent Insurance Brokers.
There are also the chances of a group insurance cover becoming invalid in case the insurer itself becomes bankrupt or an employee gets terminated as part of a cost-cutting exercise. Normally also, "the cover provided by a company may become invalid when there are changes in the employment contract or if terminated by the employer. The same thing can happen if the employee resigns or retires," says Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance Company Ltd.

Thankfully, personal health insurance policies don't suffer from such drawbacks. On the contrary, they have some added benefits over group policies. For instance, 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. Similarly, "if you are in-between jobs or if you retire, there is a possibility that you and your loved ones could be stranded in case of a medical contingency. Or your current employer might be covering your family, excluding your dependent parents," says Bimbhet, adding, "in some cases, the sum insured offered through employer's insurance arrangement might be inadequate." However, your personal health insurance gives you the freedom to choose the sum insured as per your requirement. Among other benefits, income tax benefits under Section 80D of the IT Act can be enjoyed, while no claims by an insured also gives a cumulative bonus, i.e., automatic increase in the sum insured without paying any extra money for that. It is, therefore, "always advisable to have a personal health insurance policy even though the employer may be providing group health insurance," says Bimbhet. Dhingra agrees. "We always advise individuals to buy additional coverage for themselves and their families. We advise them that the health insurance provided by their employer can be withdrawn at any time and is in any case not available when they retire," he says.

This is, however, not to suggest that group health insurance is useless. On the contrary, "the group cover may have its own benefits. But it is provided by the employer and is not the `right' of the employee in true sense, while their own personal insurance belongs to them," says Dhingra. Moreover, the group cover is beneficial as long as you remain in job or it doesn't become invalid. Beyond that it is your personal health cover which will stand you in good stead and also serve you in times of crisis.

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