It should be evident to most of us that those with a non-permanent or corporate job should not rely on their group health insurance or group life insurance because they can lose the job anytime and become uninsured.
I have heard stories of those who became hospitalised the day after they left the job or were terminated. In one instance, hospitalization arose due to an accident on the ride home from work after the farewell party! So it is obvious to any fan of commonsense that private health and life insurance is a must.
However, this does not mean those with a permanent/secure job or even a relatively stable job can get away with group life or group health coverage. This is because, unlike private insurance, a group policy is a new policy even if your employer renews the agreement with the same insurer!
It is easy to understand why. Unlike a private policy, an organisation’s insured pool keeps changing, so the group policy is issued fresh each year. The trouble is because it is a new policy each year, the term and conditions also change each year!
For instance, a group insurer covering pre-existing diseases from day one may suddenly decide to remove that clause if it affects their profitability. Or they can increase the premium steeply. Of course, we would expect the organisation to negotiate a better deal with someone else, but that is impossible forever. Once all insurers get enough market share, they would be under the hammer of claims. See: Claim rejection data for standalone health insurers for FY 2021-2022. The point is they are unreliable.
Some group insurers offer an add-on opinion for extra coverage for both life and health insurance. These add-on covers can be opted for by individuals at extra cost. However, these add-on options can be suddenly removed.
Another important reason not to rely on group insurance is the HR team getting the deals may not always be well informed of all terms and conditions of insurance. We will have to live with what they work out.
In summary, enjoy the benefits of group policies (as long as they last!) but never rely on them. Always buy private life and health insurance per your family’s needs.
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Dr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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