Companies may change health cover plans due to cost issues

Published in Mint on, Feb 12 2013, Written by Kapil Mehta

I am 53 years old and work with a large company. My wife and my two teenage daughters are dependant on me. My company takes care of all our healthcare needs, hence I have not opted for any health insurance cover, though I do have a life insurance policy. As of now, we do not have any known diseases. I will be retiring by 2021. Should I buy a health insurance policy right now or should I do so post retirement? If so what kind of options do you suggest?
—Sam

There are four reasons why I would strongly suggest that you buy a personal health insurance, covering your entire family now.

First, there is no guarantee that your company will continue providing a comprehensive cover for all of you. Several companies change their healthcare policies if costs increase. They could restrict the family members covered or introduce co-pay or make you bear a part of the insurance cost.

Second, you may decide to change jobs to a company without the same level of coverage.

Third, individual health plans typically have three-four years exclusions for pre-existing diseases. This is the most common ground for declining claims. Since your company pays your medical bills, you will need to use your health insurance only after all exclusions and waiting periods end. This is the most effective way to transition from company to personal health insurance.

Fourth, if you do develop even a moderate health condition close to retirement, you may find it difficult to get a good policy then or may be faced with the prospect of disease exclusion at that time. There is enough empirical evidence that insurers hesitate to insure seniors with health problems.
You should opt for a large cover that will be relevant even in 2021 when you retire. A family floater of Rs.25 lakh will cost you about Rs.45,000 per year. I think that is an investment worth making.

I purchased a car in November for which I took a car loan. Is there a policy that can cover the loan? Are there add-ons that you can recommend for this purpose?
—Aditi

Why don’t you buy a 100-year term insurance for Rs.15 lakh? If you are 30 years old, this will cost you less than Rs.3,000 which is a small amount compared with the car’s cost. If you were to die before repaying the loan, the death benefit paid to your nominees will allow them to retain the car. I don’t believe you need any add-ons since your primary objective will be met with this term insurance.
If you broaden the objective to more than just covering your car loan then definitely consider a critical illness cover. This is a cost-effective way of insuring yourself against several diseases such as cancer, heart attacks and paralysis. Accidental death benefit is another low-cost rider that can significantly increase the death benefit if you die due to an accident.

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