Why relying only on corporate health cover will eventually cost you more

Inadequate coverage and other limitations can be crippling

Gagan, a Bangalore resident with a stable IT job at the same company for 3 years, was confident that his company’s corporate cover of Rs 3 lakhs will come to his rescue when he needs it. As fate would have it, he met with an accident that was followed by multiple surgeries, costing him Rs 8 lakh - well beyond his corporate coverage. A few months later, his wife was diagnosed with a liver disorder. Turns out, she needed a surgery too - an expense of Rs 4 lakh. The unforeseen medical emergencies simply wiped out all his savings. 

The pitfalls of depending solely on corporate insurance in today’s world of uncertainties cannot possibly be overstated. While it is undoubtedly a valuable addition to your financial security net, it cannot be the only element in it. Most people think they are saving up by not spending on an individual health insurance plan. Contrary to this, given the rising medical issues and healthcare costs, they end up losing out a lot more than they save in the absence of a retail health plan.  In fact, data points that about 50-60 million Indians are financially debilitated by their medical expenditure. 

Our recent study of over 2000 corporate policies found the areas where your corporate policy may fall short and a comprehensive health plan steps up to secure your finances -

Low coverage: A whopping 75% of the corporate policies offered a coverage of Rs 4 lakhs or less. If we look at the rapid pace of rising healthcare costs, this amount can get exhausted in no time, especially in metro cities where most of the working population resides. This coverage standalone makes it ineffective against expensive surgery and hospitalization costs.

Room rent capping: In 48% of the corporate policies, the room rent was capped at Rs 5000 per night. This translates to policyholders either having to settle for a shared room or shell out their money to avail of treatment in a single room of choice. 

Limited scope of advanced treatment: If we talk about tertiary care that includes advanced care like specialist cancer management, neurosurgery, transplant and other complex medical interventions, corporate policies offer limited scope. Advanced treatments that may require robotic surgeries are partially covered (50% of sum insured) for 67% of these policies. Only 33% of corporate policies provide full coverage for advanced treatments which is on the lower side, given the cost for such treatments can be Rs 5 lakh and above.

Lack of customisation: Corporate health policies are designed to cater to a wide range of employees, which can limit their ability to be customised according to individual preferences and circumstances. This might leave gaps in areas that are important to you, like OPD coverage, annual health checkups or PED coverage. On the other hand, individual plans can be tailored to your specific needs, especially when the industry is formulating products for a wider range of customer needs.

Changing employment or job loss: It’s all too common to change jobs or switch to entrepreneurship for people. When you switch employers, your corporate health coverage may change or even cease. If you chance upon a medical emergency in that window, you’ll be left without cover, leaving you exposed to the risk of substantial medical bills. And worse, on being retrenched, coverage from employers automatically stops. 

Rising trend of deductibles

People working in the corporate sector can also look at the option of having a deductible in their policy. A deductible is the amount you must pay first (either from existing corporate policy or own pocket), before the health insurance policy kicks in. 

Here’s how a deductible works - if you purchase a policy with sum insured of Rs 10 lakhs for yourself and your spouse at a monthly premium of Rs 12,000 and opt for a deductible of Rs 25,000 in your policy, you can get up to 25% discount on your policy premium. This means if you make a claim, then you first pay the deductible amount, while the insurance company pays the rest.

(The writer is Chief Business Officer - Health Insurance, Policybazaar.com)