Does group insurance cover pre-existing illnesses?

Rohit Sharma, 45, has an option to buy additional health cover of Rs 20 lakh from his employer. While the company has already provided the basic cover of Rs 5 lakh, for the additional cover Rohit has been asked to foot the bill. “Though I want to buy an additional sum insured one of my main concerns is whether the policy will cover pre-existing illnesses. Should I buy a separate cover instead for my family?”

Rohit is not alone. This is the dilemma that many of us face while figuring out the coverage of group insurance plans. It is a concern as retail health insurance policies do not cover pre-existing illnesses before the completion of the waiting period given under the policy. It has also been one of the main reasons for the rejection of claims under individual health plans. In such a case how does a group insurance policy deals with pre-existing illnesses?

Irdai definition of pre-existing illnesses

According to the Insurance Regulatory and Development Authority of India (Irdai), “Pre-existing Disease means any condition, ailment, injury or disease that is/are diagnosed by a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement or for which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy issued by the insurer or its reinstatement.”

According to the regulator’s guidelines, the waiting period is 48 months for such illnesses. However, many insurance companies offer a lesser waiting period of around two years. Once this period expires, you become eligible for claims relating to pre-existing diseases (PED).

PED coverage in group policies

You will be happy to know that group policies cover pre-existing illnesses. Considering here a company is buying the policy instead of an individual, lesser chances of frauds are involved. Hence insurers are willing to cover it from day one.  Moreover, employers generally negotiate harder in asking the broader coverage for their employees as it serves as a good retention policy for the company.

Here, unlike retail plans, group policies, do not have any waiting period. Any pre-existing illness starts getting coverage from day one. It is very beneficial for employees with old parents, as senior citizens tend to fall sick often due to their age factor. Having group insurance coverage ensures they will be covered from the start, keeping your fears of claim claims at a distance.

Is the cover enough?

One of the concerns is the limited sum assured that you get under corporate insurance. It might not be enough to cover your entire family, especially when we have seen multiple family members getting infected simultaneously due to Covid 19. In such a case, it makes sense to buy a separate retail plan for your family. Preferably, take two separate family floater health plans—one covering you, your spouse, and your children and the second for protecting your parents.  Having two separate plans will help you get a higher sum insured for your family.

Hence, though having a group policy is a good idea, you may also consider buying a separate retail policy for your family to enjoy the higher cover. It can keep you protected even between jobs and post-retirement.