Skip to main content

Group Health Insurance Plans - How does it Work?

Invest Mutual Funds Online

Download Mutual Fund Application Forms

Buy Gold Mutual Funds

A health policy at a reasonable rate, no medical check-up and coverage of pre-existing illness is something everybody would love. This perfect blend is available for individuals mostly up to 40 years. However, from there on, it starts getting difficult to buy or even renew a health cover at a reasonable rate. Here is where group health covers come into play. The most common type of group health insurance is the one issued by employers to employees. This group insurance typically would cover the employee, spouse, children (usually up to 21 years) and dependent parents. However, not all employers offer health cover. That is where group insurance covers, which are offered by trusts, brokerages, healthcare companies, banks come into the picture.

How These Policies Work?

The nature of this product is very similar to the group cover issued by employers. A master policy is issued under which all the individuals are covered in the group.
So the set of terms and conditions, inclusions and exclusions of that particular policy is applicable to the entire group. Other finer terms and conditions are not standardised across group covers offered by insurers.


There is a lot of customisation that goes into these policies. This customisation is worked out by the intermediary (seller of the cover) and the insurance company based on the requirement of the customers and financial viability of the product. Certain amount of customisation happens. The waiting period might get reduced, some deductibles get modified. All these variations are worked out as far as the brokers are able to raise a certain amount of premium.


For instance, Karvy Stock Broking in association with National Insurance offered a National Health Plan. This policy covered pre-existing diseases from the first day of coverage. Another group cover offered by RB Hospitality and Health Services in association with New India Assurance also offers a policy that covers pre-existing diseases, but only after the first year.


Similarly, the exclusions can also vary from policy to policy. The Karvy National Insurance Health Plan does not cover chemotherapy and radiotherapy (for treating cancer) and dialysis (for kidney). On the other hand, the Oriental Bank of Commerce (Oriental Health Plan) has a waiting period for every illness. Hypertension and diabetes are covered after two years, polycystic ovarian diseases after one year and joint replacement after three years.

ADVANTAGES


Lower cost

Group insurance covers are up to 30% cheaper than individual health covers.
If a bank has two million customers, it will negotiate on the best premium to allow the insurer access to those customers. On the other hand, it also has a pull effect as the bank may be able to secure more customers by offering a medical policy at a 'reasonable' rate. If I have a mother who is 65 years old and I am unable to buy a health policy, I will open a bank account and buy this policy for her.

No medical check-ups

Any individual medical policy usually requires a medical check-up for individuals over 45 years before the purchase of the policy. However, this condition is waived off in a group health policy. However, individuals may be asked to sign a declaration form if any policy has a waiting period for any specific illnesses.

DISADVANTAGES



Leaving the group

A brokerage or a trust may have offered a group health cover because of the memberships. If you terminate the membership or even the intermediary and the insurer snaps the partnership, the cover will cease to exist. It is very similar to leaving a job. If you quit the organisation, the group cover may come to an end. Similarly, the intermediary may switch to another insurer because of a better incentive. In such a case, the features of the new product may not suit your requirement and you will lose out on the insurance benefit.

Discontinuity of the product

If you have a group insurance policy with a bank and the policy is terminated, you will lose all the benefits you have accumulated in the product. If you do not have another health policy, you have to go through the medical check-up and the waiting period all over again in the new policy.

FACTORS TO KEEP IN MIND



A group cover can act as top-up plan

A group health cover cannot replace the individual health policy in your kitty. For any individual, it shouldn't be a primary policy as the continuity of the policy is a big question. "Moreover, there is no clarity if the guidelines on portability work on such group insurance policies. Hence you may not be able to shift to another group policy sold by the bank/or intermediary carrying over the existing benefits," says Meena Nair.

Look at the fine print

There may be restrictions such as claims below certain amount may not be covered, specific type of ailments may not be covered etc.

Viability of the group & the product

From an insurer's perspective, a group insurance product is financially viable only if there is some homogeneity in the group. For example, if an employer is selling a group mediclaim, there is likely to be some homogeneity in the group. The average age would be in the range of 25-40 years. But if a third-party brokerage or healthcare company forms a group, just to sell this product, this homogeneity is lost. A 70-year old individual and 25-year old cannot be put in the same insurance policy. There is no consistency in terms of the risk profile of the individuals. If the policy witnesses a high claim ratio, the policy could either be discontinued or witness a severe loading at the time of renewal.

-------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now