Having being is the business of providing risk cover to clients, I come across many individuals who think that their office health policy or Group Health Insurance is good enough to take care of medical expenses. They usually are far away from an emergency fund and depend on either savings or borrowings from friends & family.
A Group Insurance Policy is a great product as it helps in certain cases however there are shortcomings that most individuals knowingly or unknowingly ignore. This ignorance costs them at a later age. Just to give you an example, I was referred a client through an acquaintance. While I was filling his form he made a declaration of a past illness for which he was treated about a year ago i.e. Sarcoidosis. His application was rejected by the insurer in subsequent week. Not loosing any hope I tried to get him a plan with two other insurers through my network, but again his application got rejected. The client is only 34 year old, I feel sad and helpless for him. Although he has an insurance from his employer but it offers meager cover of Rs 2.5 Lac only. He now realises his mistake of depending only on employer health insurance. Moreover in an uncertain environment if he loses his job or his company shuts down then he will have no medical cover. He will have to depend on savings done for his retirement and children education.
Where do office/ Group Insurance lacks – Here are cons for Group Health Insurance
A Group Policy is a customized policy that a employer provides to its employees. In some cases the employer pays the entire amount while in others employees share the premiums to be paid.
Sub limits – These policies usually come with clauses wherein there is cap on expenses to certain surgeries or expenses. Like Room Rent (including nursing charges) is usually 1% of SA and 2% for ICU Charges.
Co-payment – At times these policies come with clause of co-payment where one has to share the cost of hospitalisation with the insurance company. In simple words only partial amount will be paid.
Validity- These policies are only valid till the time you are employed with the company. Tragedy can strike when you are dancing or taking a shower. There are cases when people get hospitalised due to accident while they are switching over from one job to the other.
Coverage at 60 years- If you think that insurance companies will be running after you once you intend to buy health insurance at 60 years. You are wrong. Given the lifestyle that most people now have post 45 yrs age most diseases and illness start to kick in. Once someone has had a medical ailment it is too difficult to get an insurance. Insurance companies see their risk increasing and hence decline the acceptance of the proposal.
Individual needs not covered – Since the group is designed for benefit of larger group it fails to help your individual need. Like a Group policy might not have maternity cover but you would want one. Or it shall not cover your parents but you would like to cover your parents or wife & kids.
Coverage Once Employee Moves Out – Employees or individuals are at high risk once they move out from one employer to the other. There have been many cases when individuals did not have a cover during the switch-over period.
Where does office/ Group Health Insurance Policy work
Premiums- The premiums are fairly low when compared with an individual / floater health policy
Pre-existing disease- Any hospitalisaton due to a pre-existing disease is covered from Day 1
Maternity- Most individual/floater policies have a waiting period ranging from 6 months to 84 months before a claim can be made for maternity. Incase of Group Insurance maternity is an optional cover and so is it’s waiting period. One will have an option to cover maternity from Day 1
Coverage for Parents- Health cover for parents above 60 years age is difficult to come by. A group insurance policy not only ensures coverage from Day 1 but also costs fairly less.
I hope now you would have developed an understanding why a group health insurance policy falls short various parameters and hence does not provide with complete coverage.