This insurance cover may be inadequate

Nitya has been working for the same company for over 10 years now. All this while, she was under the impression that the employer’s group insurance cover of Rs 3 lakh was sufficient for her. So, she did not buy any additional personal insurance, exclusively for herself and her family. But she had no idea how dearly this mistake would cost her.

However, a breast cancer diagnosis left both her financial and physical health shattered. The company only paid Rs 3,00,000 towards her treatment. For the rest, Nitya had to drain her own pockets.

Health ailments and diseases can come knocking anytime. And for this, you need to always be adequately prepared. Such is its extent that reports suggest your regular health insurance coverage is rendered inadequate every 5 years. With 14% medical inflation singing Indian pockets, getting a solid health cover, all for yourself and family is a necessity.

But why is opting for a separate insurance necessary? Says CFP Bhakti Rasal, “While group insurance plans are cheaper in rates, without any waiting periods and  medical underwriting relaxations, they come with high financial risks that can cost you way more during a medical emergency”.

Generally, group insurance plans are tailor-made for larger groups. So, individual factors like lifestyle co-morbidities, habits, past family history and annual income are not evaluated. So, the person is more vulnerable in case of medical trouble.

Let’s understand this through an example. The average cost of breast cancer treatment in India is about Rs 15,00,000. This includes pre-procedure test costs (up to Rs 1,00,000), drug and treatment costs (up to Rs 10,00,000) and other post-hospitalization expenses. So, even if Nitya’s company paid the entire Rs 3,00,000, what about the remaining Rs 12,00,000 that Nitya had to personally pay?

Had she opted for a separate health insurance, she would have had the liberty to choose the sum insured, unlike group cover. With individual health insurance, you can also choose the type of coverage that matters most to you, such as dental, vision, or any specific disease coverage. This level of control is not available in a group policy.

One of the biggest drawbacks of having just a group insurance plan is the seriously limited choice of the doctors and specialist network you can avail services from. Any professionals out of this list might not be covered by the policy. And what happens if you end up leaving your job? Will your group insurance work then?

The answer is no. Let’s assume that Nitya had to leave her job because of her medical condition. In that case, she will not be eligible for her company’s group insurance cover. So, if you’re switching jobs, temporarily unemployed, or even self employed, you’d be left without any cover.

And if you think a plain top-up above employer’s group insurance policy makes up for it, make no mistake. Even if Nitya had brought a top-up worth Rs 5,00,000 over and above the company’s policy, it will not kick in till the company does not pay the insured Rs 3,00,000.

Had Nitya taken a personal health insurance worth Rs 20,00,000, she could have saved paying Rs 5,00,000 from her own pocket.