Sunday, March 17, 2013

Why the Corporate Health Insurance is not enough

Case Study:-
Raj has just graduated and was lucky to get placed in a top IT company. He was happy that his company was located near his home; he had a company sponsored health insurance policy, understanding colleagues and great work atmosphere! With a stable job, Raj soon got married. With everything going so well for him, Raj had no worries until his mother needed to be hospitalized for a hip surgery. But Raj wasn't perturbed as he had a health insurance policy which would pay for it. Soon his wife gave him the good news that they were expecting their first baby, Raj was ecstatic.
Within 6 months however, everything changed, global economy went through a recession and Raj’s company which was dependent on US market felt the consequences. His company soon started cutting costs and newer employees had to go.
Now Raj was no longer the confident young man that he used to be. He was depressed, with EMI to pay and more potential expenses to bear with the new child! It was after his wife’s delivery that he realized that had he had an independent health cover; he wouldn't be in such a financial mess. Realizing his mistake, Raj quickly got himself and his family a health insurance policy in spite of the money crunch at home.
 What does this story tell you? Other than the fickle nature of good fate, we understand that depending on the company’s health insurance policy alone is not a good idea. Like loss of jobs, there are many reasons—as below-- why you must buy an independent health cover.

You exceed your cover
A corporate health insurance plan looks attractive compared to individual health insurance plans but the corporate health insurance policy is not a complete solution. Like in case you have more than one claim in one year and you exceed your cover amount of your corporate health insurance policy; you would have to pay the residual amount with your own money which will affect your finances. Imagine if Raj had both his wife’s delivery and his mom’s surgery in one year, the sum assured wouldn't have sufficed and Raj would have had to arrange for a large amount from his own pocket, even assuming he had not lost his employment. But if you buy another health insurance policy, independent of your corporate health insurance policy, you wouldn't have to worry about the balance amount; between the two health insurance policies, your total outgo would mostly get covered.

You lose your job or are between jobs:
Like Raj, many of earning members of the families suddenly find themselves without jobs. With loans to pay and mouths to feed, a sudden medical emergency can topple the budget of the entire household. You cannot rely on your good luck or your friends and family to provide for you during such emergencies. Be self-reliant and get an independent health insurance policy which would be a great help during times like these.

Your company policy changes:
Your Company may suddenly decide to change or modify some of the conditions in your health insurance policy like not covering family members of the employees or not covering pre-existing diseases. In such cases you would suddenly discover that you are left uncovered and are vulnerable against the expenses and have to be subjected to the waiting period if you buy a new individual health insurance policy at that stage.

After Retirement:

Someone who has worked for a company for majority of his life will find that the company health insurance which had taken care of all the medical bills is no longer available post retirement. For them who have retired and now want to get a new independent health insurance policy, it would not be an easy ride ahead. Even though there are many senior citizen policies available, one may have to undergo medical tests, pay additional premium for pre-existing diseases, be subjected to compulsory co-payment features and then there is the waiting period for pre-existing diseases. It certainly would be difficult to get a new health insurance policy at 60 than say at 30. At a younger age, not only will you get the pre-existing diseases covered earlier but your premium may be lower because of ‘no claim’ discounts. So get an independent health insurance policy while you are working rather than suffer after retirement.
So now you know why you cannot just relax under the impression that all your health expenses will be taken care by your company’s health insurance policy, you need to create a safety net in the form of a separate health insurance policy for you and your family to fall back on in case of an emergency that your company’s health insurance policy will not pay for