Last Updated on Jan 18, 2022 by Manonmayi
Health insurance as a product has existed for a very long time. However, the recent pandemic truly emphasized the importance of buying a health insurance policy in one’s name. Modern treatment is not inexpensive, and when you need to bear the expenses out of your pocket, it becomes quite difficult to manage. Without further ado, let’s dive into understanding individual health insurance meaning.
This article covers:
- What is health insurance?
- What are the benefits of a health insurance policy?
- What is an employer’s health insurance policy?
- Should you get individual health insurance apart from your employer’s plan?
What is health insurance?
In layman’s parlance, health insurance is a policy that offers cover against medical and surgical expenses that may arise due to illness. A health insurance policy covers you against hospitalization expenses, along with the cost of medicines and doctor’s consultation fees that go with it.
Most insurance companies offer cashless claim settlement facilities in clinics and hospitals they have tie-ups with. This means you may get treated at such facilities, and your insurance company settles your bills directly with the hospital. This saves you high medical costs, which are usually unexpected, and therefore, not provided for.
Also, if you seek treatment in a non-network hospital, the insurance company will reimburse your medical or surgical expenses when you submit the bills and relevant documents. Either way, you need not burn a hole in your pocket for the treatment.
What are the benefits of a health insurance policy?
The key reasons for buying a health insurance policy in your name as an individual are:
- Health insurance provides you with financial support while taking care of your medical or surgical expenses.
- Many health insurance policies grant you coverage against critical illness. Treatment for those ailments does not come cheap, and an insurance cover helps in such situations.
- Cashless claim settlement at network hospitals ensures you do not pay treatment expenses out of your pocket.
- As an individual, you will get a tax benefit under Section 80D of the Income Tax Act, 1961, for up to Rs. 25,000 per annum towards the premium paid for health insurance.
What is an employer’s health insurance policy?
Employer health insurance policies are bought by an employer for his/her employees. The benefits of insurance cover can also be extended to employees’ immediate family members. The insurance premiums are borne by the employer, and the names of the employees, along with their dependents, are included under a master policy.
Employees are an organization’s most valuable resource. Employers normally buy group insurance policies as a strategy to retain their workforce. Also, the benefits extended to employees contribute to a company’s employee engagement efforts.
If you were wondering what is individual health insurance, keep on reading. As an employee of a company where you are covered under your employer’s health insurance, you may think you need not spend more to buy an individual health insurance policy. However, you must consider buying an individual policy for the reasons discussed below in this article.
Should you get individual health insurance apart from your employer’s plan?
The short answer is yes. An individual health insurance policy for you and your family is a must, even if you have company insurance coverage. Here are a few key differences between an individual plan and a corporate plan:
- Coverage: In an individual plan, you have the flexibility of choosing the sum insured, and you may buy additional coverage for critical illness. This makes your individual health plan more versatile than a group medical policy. Corporate plans are generally taken considering common ailments. Usually, the treatment costs covered are at a bare minimum. Critical illnesses may not be covered at all.
- Choice of the sum insured: The sum insured granted to you depends on your designation at the company. Your current CTC may be a key determinant here. Therefore, you may find yourself underinsured at times. Under an individual plan, you have the choice of taking the sum insured you need.
- Period of cover: The period of cover against any unforeseen medical expenses will depend on the policy tenure. Usually, people buy an individual health insurance policy for themselves and their family members. Hence, as long as the policy is renewed on time, the insurance cover remains seamless, supporting you in unfortunate circumstances.
- When you are between jobs: In the private sector nowadays, nobody can guarantee continuous employment without a break in service. Loss of jobs due to redundancy is commonplace. The period for which you may remain jobless cannot be estimated. As nobody can predict the timing of a medical emergency, your personal health insurance policy will support you, even when you are unemployed.
- You cannot enjoy tax benefits: Under the Income Tax Act, 1961, you can get a tax rebate on individual health insurance premiums.
Considering the points discussed above, it is ideal to buy a health insurance policy, even if your employer offers health insurance. An individual health insurance policy will supplement the health policy offered by your employer. The two policies together will ensure adequate cover.
Industry experts have strong opinions on this matter. Even leading news agencies like The Economic Times have run stories on individual health insurance plans. The clear recommendation is to buy an individual medical policy in your name, even if your employer offers you a company policy.
Should I have an individual health insurance policy?
Yes. It will cover medical and surgical expenses if the need arises.
Should I opt for an employer’s health insurance policy?
Yes, that is part of your CTC. Your employer has made provisions for that expense. Therefore, you should not forgo the benefit.
Should I opt for co-pay under my employer’s health insurance policy?
Yes, as the amount you need to contribute towards medical coverage for your dependents will be much less under an employer’s health insurance policy compared to an individual policy, you should co-pay.
Which policy should I preferably charge?
If you have an individual and a company health insurance policy, it is better to lodge your claim under your employer’s policy. That will ensure your claim history on individual policy remains clean, and you continue to enjoy the benefits of no claim bonus.