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Employer's Group Medical Policy Not Enough. Buy Own Insurance Too.

As one of the many perquisites, employers often provide group health insurance cover to their employees.

Most people tend to SOLELY rely on this. They hope to cover the costs of medical treatment, if any, towards self and family through such a group policy. Since there is already a cover available, buying an additional policy is considered as a needless expense.

They often wait till retirement to buy their own health insurance policy.

Unfortunately, this is not the right strategy.

This half-hearted approach to health insurance, can prove (seriously) damaging to your financial health.

Let's explore why 'own' medical insurance cover is quite often a necessity, even if you are covered under a 'group' policy.

One. Group insurance cover provided by the employers, is typically in the range of Rs.3 to 5 lakhs. Given the huge costs on medical treatment, this amount is barely adequate. Very rarely do the companies insure larger sums of around Rs.10-15 lakhs.

As such, particularly in cases of serious illnesses, you may have to probably pay a large part of the medical expenses out of your own pocket.

This defeats the very purpose of insurance.

Two. As part of the cost reduction programme, many companies have even curtailed the total sum assured.

Alternatively, they are not enhancing the cover with each passing year. Thus, the sum assured does not keep pace with the medical inflation. So, in a few years, this cover would prove to be insufficient and inadequate.

You must, therefore, re-check the cover provided by your employer from time to time.

Three. With a view to restrict the costs, many such group insurance covers from employers come with limited benefits only. They do not provide a comprehensive protection.

Again, quite often you may have to shell out a part of the medical expenses out of your own pocket.

Again, the purpose of insurance is defeated.

Four. Many group policies do not cover the parents. The family members insured include only the spouse and two children.

Earlier, health insurance was not commonly available. Besides, it was quite expensive. And, of course, the medical treatment costs too were often reasonable. Hence, in many instances, the parents do not have any insurance cover. 

It, therefore, becomes necessary for you to buy a health insurance policy at least for your parents.

Group health insurance policies are surely handy, but not always adequate.

Five. Unlike the past, frequent job changes is the norm today. Unlike the past, job layoffs too have become quite common.

Such instances would leave you unemployed and uninsured, during this interim period between two jobs.

An own health insurance policy will take care of such contingencies.

Six. It is quite difficult to buy a health insurance policy at a late age. Insurance companies often reject the proposals of the elderly people due to high risk of claims.

On the other hand, renewing an existing policy is mandatory.

So, if you think you will buy your own policy after retirement, you are taking a (really) big risk.

Seven. It is also very expensive to buy a health insurance policy at a late age. As the age increases, so do the premiums. So much so that sometimes the cost becomes prohibitive.

On the other hand, a policy continuing for many years is likely to be comparatively cheaper due to the accumulated no-claim bonuses for many years.

Eight. In case of new policies, there is a waiting period of around 1-2 years for certain specified ailments. Plus, pre-existing illnesses are not covered for around 2-4 years.

So, a new policy bought in the later years, would leave you exposed to the risk no insurance cover for these specific illnesses for around 1-4 years.

It's definitely not worth taking this risk.

Nine. Some group insurance covers too may not insure the pre-existing illnesses for a specified period. In such cases, frequent job changes would often leave you and your family uninsured till you complete the required number of years in the new job.

Again, it's definitely not worth taking this risk.

And, as recently advised, Buy Your Health Insurance Policy Before 40.

While, the additional policy is an extra cost, it is definitely worth it.

Firstly, the premiums on medical insurance policies are quite economical. So they won't bother you too much.

Secondly, such premiums are allowed as deduction under the Income Tax Act, thereby reducing your tax liability. So the effective cost is still lower.

Lastly, to begin with, you need not buy a big cover. You can start small and steadily increase the Sum Assured each year till you reach a reasonable figure.

Concluding: Even though you and your family are covered under the group medical policy of your employer, it is STRONGLY RECOMMENDED that you must buy your own medical insurance policy too.

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