Your company health cover may not be enough: Why a personal policy still matters

Reports coming in for today mention that A health insurance card from your employer can make buying another policy feel unnecessary. After all, the firm is already paying the premium and the policy may cover you and, in some cases, your family. But this cover is linked to your employment, and the benefits available to you depend on the employer's group policy.

If you leave the job, retire or move to an organisation with a smaller health cover, the protection can change. That is why many employees treat employer insurance as the first layer of cover and maintain a separate individual policy for longer-term protection.

Your job-linked cover can disappear when you leave

The biggest softness of employer health insurance is the connection with your job. Group health policies are arranged by the employer, so the terms, sum insured and benefits can change when the policy is renewed or when you move to another firm.

For instance, an employee may have a Rs. 5 lakh group cover today. A new employer may provide Rs. 3 lakh, while another may offer different benefits or no parental cover. The amount and conditions are decided by the respective group policy.

IRDAI rules provide for migration of members of group health insurance policies to individual health insurance or family floater policies with the same insurer, subject to the applicable terms. But it is better not to wait until a job exit is imminent before checking what options are available.

A personal policy gives you continuity

An individual health policy stays with you even if your employer changes. You control the sum insured, insurer and policy features, rather than depending on your firm's annual group insurance arrangement.

There is another benefit: continuity of coverage. IRDAI allows portability of health insurance policies, including group health insurance, subject to the applicable rules. Credits for waiting periods for pre-existing diseases and

specified conditions can be carried over when portability or migration requirements are met.

Buying a personal policy while you are younger can additionally avoid having to arrange your first individual cover at an older age, when premiums may be elevated and health conditions can make underwriting more complicated.

Employer cover may have limits you cannot change

Group insurance can be useful, but employees do not always get to choose its terms. The policy may have a set sum insured, room-rent restrictions, co-payment, exclusions or limits on particular treatments.

Take an illustrative case where an employer provides Rs. 5 lakh of cover and a hospitalisation costs Rs. 7 lakh. The policy may not pay the entire bill. The final amount payable will depend on the policy's admissible expenses and other conditions, leaving the employee to fund the balance.

A separate policy can provide an additional pool of cover. If both policies allow the particular claim and coordination rules are met, the personal policy can potentially help meet expenses beyond what the employer plan pays.

What to check before buying another policy

Do not compare policies only on the sum insured. Check waiting periods, exclusions, room-rent limits, co-payment, restoration benefits, network hospitals and coverage for parents or other dependants.

For someone with adequate employer cover and a tight budget, maintaining a personal policy may require additional premium today. But the purpose is different. Employer insurance handles part of the present risk, while personal insurance can provide a layer of cover that is not tied to the next appraisal, job switch or employer.

The sensible approach is to know exactly what your firm policy covers and then decide how much additional protection you would need if that cover disappeared tomorrow.