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Coping With Group Health Policy Cuts

| 9/20/2012 9:00 PM Thursday

In a corporate cost cutting scenario, is your company’s group health insurance plan the latest casualty? What measures should you take to ensure adequate health cover for yourself and your family? Jay Sampat tells you more.

KEY POINTS:

  • Corporates normally offer the same group health coverage for employees with the same designation, or there could be illness-wise capping. As a result, the sum insured could be insufficient. Parental coverage is another key benefit that has taken a hit over the past few years.
  • For an individual, the best recourse to counter a reduced group cover is to buy a standalone health policy. Top-up covers are another alternative.
  • As per the guidelines released by the IRDA, porting from group to individual policies is permissible. You can convert your group cover into an independent policy while retaining all the continuity benefits.

With the slowdown upon us, companies are looking at various ways to cut costs. One such area is the premium outgo on group health policies. Many companies are looking to curtail these benefits when the group policy for their employees comes up for renewal.

For an individual, the best recourse to counter a reduced group cover is to buy a standalone health policy. In addition to acting as a flanking strategy, this arrangement has other benefits too. For instance, most group schemes cover pre-existing illnesses from day one, whereas individual covers usually prescribe a waiting period of one to four years. Therefore, being simultaneously covered under group and standalone policies will ensure continuous coverage for pre-existing illnesses.

One may consider family floater policies to cover the entire family, as these are a cost-effective option. However, in case your parents are senior citizens and are not in good health, it is better to buy a separate policy for them.

You can also look at purchasing a fixed benefit policy, wherein the insurance company undertakes to disburse the pre-defined amount even if you have already made a claim under an indemnity-based policy like group covers (where expenses actually incurred are reimbursed). The key advantage of fixed benefit policies is that policyholders do not have to worry about the claims settlement, as they know in advance the amount that would be disbursed. Also, the documentation procedure is simpler. One of the major benefits of such policies is that you can use the one-time payout to take care of your recuperation expenses.

Top-up cover is a cheaper alternative to individual policies. This is activated when your group cover falls short of your requirement. Some top-ups restrict their coverage to major ailments listed in the policy. Besides, they could specify that claims would be entertained only if the single claim is larger than the individual sum insured offered by the base policy (group health cover). Therefore, be sure to read the fine print before signing up for a top-up scheme.

 

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