Gone are the times when people were reluctant to purchase health insurance policies and concentrated only on purchasing life insurance policies. Thanks to the rise in awareness among the public. These days, as most companies offer corporate insurance policies to employees as a part of their compensation benefits, people assume they need not shell out additional money to purchase an individual insurance policy. However, field experts recommend otherwise because of the limitations that come along with the corporate policy. So, it is essential to understand the advantages and limitations of both policies before making a decision.
Understanding personal health insurance policy:
A personal health insurance policy is one of the much sought-after policies. The plans are designed to provide health insurance coverage to a single person. The insured is entitled to coverage for hospitalization and other medical expenses. One can also enhance the extent of coverage of the policy by paying for add-ons. Though the coverage is provided only to the insured and not extended to their dependents under the plan, one can add multiple family members to an individual health insurance policy and provide separate coverage for each of them. Customization of the sum insured based on their requirement can be done. A policyholder is allowed to make multiple claims in a year, and many insurance companies will offer a cumulative bonus for every no-claim year. The plan, most of the time, comes with lifetime renewability.
Understanding corporate health insurance policy:
A corporate health insurance policy is a type of employer-sponsored policy that companies offer to their employees as a compensation benefit. Simply put, it is a type of group health insurance coverage undertaken by employers for their employees. It means that the employer will pay the premium for the policy on behalf of their employees. Usually, the plan can be extended to the immediate family members of employees – spouse, children and dependent parents – by paying an additional premium amount from employees’ pockets. This policy covers hospitalization expenses, maternity costs, critical illness coverage and pre-existing disease coverage, among others.
Policyholders generally prefer to avail the corporation health insurance policies because they are less expensive than the individual plans. In addition, insurers will also help lower overall medical expenses by offering incentives and discounts. But it provides only a fixed amount as coverage and one to shell out from their pocket to increase the coverage. One major disadvantage of the policy is that the contract with the insurer will discontinue once you quit the company.
Difference between personal and corporate health insurance plans:
Though both the personal and corporate health insurance plans appear to be the same without any major difference for the naked eye, both plans have their own pros and cons. So, it is crucial to understand the differences well in advance to avoid last-minute tension.
- Premium cost:
The premium cost for a corporate health insurance plan is low and is generally paid by the employer on behalf of the employees. But, in most cases, the coverage it offers is limited. It is designed to cater for the needs of a group of people, and no major customization can be done. Employees must pay from their pockets to increase the coverage or include their dependents under the plan.
In the case of an individual health insurance plan, the premium cost is typically higher because it is customized to cater for the medical needs of a single person. It offers extensive coverage to the insured.
The corporate health insurance policy will remain valid only as long as the agreement between the company and the tie-up between the company and the insurer remains valid or as long as the employee stays with the company. An employee does not have the option of renewing the policy after the resignation, and he will have to start from scratch once he joins the new company. It is not a good idea to start a health plan after retirement because of the waiting period and other clauses.
Unlike corporation health insurance, personal health insurance plans do not have an expiry date and come with life renewability.
- Coverage amount:
Insurance companies provide coverage up to Rs 2 to 3 lakh under corporate health insurance plans. Considering the rising medical inflation and prevalence of chronic diseases, the coverage is not sufficient in most cases, and it is difficult to bridge the gap between the requirement and the coverage. Ideally, it should be at least six times their monthly salary. Also, in certain cases, when a company goes through financial hardship, they might reduce the coverage, ask them to co-pay a part of the premium or exclude dependents from the policy.
Coverage will not be a problem under a personal health insurance policy because it will be customized based on the insured’s financial affordability and medical needs. A person insured under the policy need not worry about coverage.
Health insurance experts always recommend people to purchase an individual health insurance policy even if they have corporate insurance. This will act as an added cushion in case the medical expenses go over and beyond corporate plan limits because the remaining expenses can be claimed under the personal insurance policy. Also, one can remain stress-free during the period between job jumps and after retirement. It is better to claim expenses from a personal insurance plan after utilizing the corporate plan.