Buying a separate cover for self and family is a healthy policy

Salaried employees bank on medical insurance cover offered by their employers for healthcare needs of themselves and their families’. However, with rising healthcare costs and trimming of insurance benefits offered on employer’s group health policies, individuals are forced to buy a separate health cover for the family’s insurance needs. The conventional wisdom is that they should buy a top-up family floater policy with a high deductible amount. Simply put, this policy will come into play only when the person exhausts the insurance cover offered by his employer.

However, most insurance experts say that it is not a smart way to buy a health cover. “Even if your employer offers you a base family floater health insurance, you should have a separate cover for yourself and your family. And if budget permits, you can consider buying a top-up family floater health insurance policy with high deductible amount,” says Rahul Aggarwal, CEO, Optima Insurance Brokers.

A separate health insurance family cover is a must as it won’t be wise to solely rely on the insurance provided by the employer. “In case of a job loss or a job change, one may not continue to enjoy base health cover,” points out Sudhir Sarnobat, CEO, medimanage-.com, a health insurance advisory firm. He advises individuals to buy a basic health insurance policy as most people find it difficult to buy one when they retire. Aggarwal says, “In the economic slowdown, there are many instances of individuals sitting jobless for months. In such circumstances, a high deductible policy is of no use if there is a hospitalisation involving expenses below the deductible threshold.”

Most employers offer health covers typically in the range of Rs2 lakh and Rs5 lakh. These policies cover the em ployee, spouse and two kids — in some cases even her parents or in laws. However, factors such as rising cost of healthcare, simultaneous hospitalisation of more than one member in the family, may make the coverage of Rs5 lakh inadequate. There is also a bigger threat of curtailed benefits on covers offered by employers due to rising premiums. Many individuals seem to believe that a top-up policy will take care of the problem. A top-up policy offers high sum assured — Rs7 lakh to Rs25 lakh — but it will pay only after you exhaust the base cover (the employer’s cover in this case).

For example, suppose you have an employer’s cover of Rs3 lakh and you make claim of Rs7 lakh. The topup plan will only pay Rs4 lakh (Rs7 lakh minus deductible of Rs3 lakh). So, experts advise on buying a cover for you and family even if you are covered by your employer. Individual covers for every member of the family is ideal. But if you can’t afford it, you can opt for a family floater cover.

If a family floater is also beyond your budget, you can settle for a smaller base cover and combine it with a top-up plan. A 40-yearold man with a family of spouse and two kids can buy a family floater policy of Rs10 lakh for a premium of Rs17,724. The same individual can buy a combination of family floater health insurance policy of Rs3 lakh and a top up family floater of Rs7 lakh (with a deductible clause of Rs3 lakh) with a yearly premium of Rs13,072.

Sanjay Datta, head — underwriting and claims, ICICI Lombard General Insurance, says that employees can also consider purchasing a top up cover on group health insurance platform if their employer gives them that option. Depending on the group size, such top up covers can be 5% to 10% cheaper than the similar covers available on the individual platform, he says.