Published in Livemint. Written by Kapil Mehta.
A candidate who had come for a job interview grilled me for 20 minutes when I asked if he had any questions about our company. This was justified. Changing jobs is such an important decision that you should clarify as much as possible before accepting an offer. Most questions are on company objectives, roles, and compensation, but I suggest that job seekers also include insurance in that list. Employer-provided insurance contributes significantly to financial security and many policies, such as group or liability covers, can only be bought by companies.
Ask about health, life, accident, and liability insurance. Employers often buy group health insurance, OPD (outpatient department) covers, and travel insurance for employees. A group health insurance covers hospitalization costs as an individual mediclaim does. But unlike individual insurance, it covers pre-existing diseases immediately, without the need for proposal forms or medical tests. Group health covers may also allow employees to convert the group insurance into an individual plan if they leave the company. It’s also important to ask which family members are covered. While immediate family members are generally insured, some employers ensure parents as well. For many senior citizens, this can be the only insurance they have. Find out who will pay the premium. Some employers pick up the cost but many recover this from your salary. When you join a new company, ask for the mediclaim cards. An early claim can get rejected if you have not been endorsed into the insurance.
Some employers provide OPD and wellness benefits. This may be in the form of an annual health check-up or a budget for OPD expenses. These covers are less common but, if offered, indicate a strong employee orientation.
Employee-provided term insurance will pay your nominee an amount if you die while you are employed by the company. The amount in these covers is generally between one and three times the annual income. Ideally, you should have 10 times your annual income as term cover, which means that you must bridge the gap by buying your own personal term plan. Like group health, group term plans do not need medical tests or disclosures. When you join, do specify your nominee so that, in the event of your death, the benefit is paid quickly.
Some companies provide employees with personal accident insurance instead of a term plan. This covers you for disabilities or accidental death. The advantage of this insurance over a group term life is that it covers disability, but the flip side is that death only due to accidents is insured. Personal accident insurance is cheaper than comprehensive term insurance, which is why it is more common.
If you will travel for work, make sure that you have travel insurance, both international and domestic. Companies can buy this insurance in bulk for all employees. You should have the insurer’s contact details for all the countries to which you travel. If you fall ill overseas, many insurers will guide you to the right medical facilities or step in to handle emergencies.
Senior executives, including directors, are exposed to significant liabilities. These range from allegations of wrongful termination, sexual harassment, misrepresentation, and personal guarantees. There are cases where personal guarantees have been enforced on the legal heirs of a director. This is where a directors and officer’s (D&O) liability comes in. This insurance pays for defense and settlement costs where an individual is named in litigation. Directors and executives now routinely review the company’s D&O insurance before accepting a position. Independent directors, in particular, must ensure that D&O insurance has a sum assured that only non-executive directors can use. In litigious situations, this ensures that the entire sum assured is not used up by the management team, but some cover is set aside for the directors as well.
It can be awkward to ask so many detailed questions when you are joining a new company. However, it is perfectly acceptable to ask for a list of insurance covers that are available and most companies will immediately furnish that. Employer-provided insurance does not substitute but complements personal insurance because you may leave a job or the employer may withdraw the insurance benefit. Having your personal health and term insurance covered is necessary even if your employer provides excellent insurance.