Skip to main content

Why you should not only relay on company medical insurance to cover your parents

   Group health insurance covers provided by employers are a great source of comfort for millions of employees. Such schemes typically pick up the hospital bills of employees and their family members. However, their utility value ranks the highest when it comes to the employees' elderly parents or in-laws. Generally, many health insurers dither from extending covers to senior citizens, as the likelihood of individual claims is quite high in this category. Even when they do, many senior citizens find the premiums to be beyond reasonable limits. Little wonder then, that employees treat employers' group health cover as a godsend.


However, last year, some companies and health insurers decided to impose ceilings on the benefits in order to control mounting losses in their health portfolios. In most cases, this took the form of introduction of the co-pay clause. A few organisations completely excluded the cover for parents, while some others transferred the cost (premium for parents' cover) to employees. Last year, some companies had capped the benefits provided to employees' in terms of parental coverage and the trend continues this year as well. Organisations are looking at managing their costs better. So, one of the ways for insurers to take care of both ends is to maintain the same costs, but revise their service offering. Limiting the coverage to just the employee, introducing co-pay, etc are some of the changes that are being made towards this end. Some companies also offer employees the option of paying an additional premium for extending the cover to their families or increasing the cover amount.


Due to claim ratios being unhealthy in the parents' segment, insurers have either hiked the parents' premium ranging from 30% to 100%, or added new restrictions like co-pay, deductibles, treatment sub-limits and so on. The changed scenario means that whether your organisation tightens its belt or not, you need to be prepared for the possibility that your parents could be left out of the group cover. You will also be entitled to deductions under Section 80D for the mediclaim premium that you pay for your parents.


SITUATION 1

If parental cover is scrapped altogether: It could be a major setback, but companies seldom take such a drastic measure. But, you will be better off reducing your reliance on your company's largesse even otherwise. It's high time employees stop depending only on the employer-enabled parental coverage and start evaluating a good health insurance product, preferably offering lifetime coverage. As parents get older, the chances of getting a good cover with wider coverage terms in the retail health insurance space decreases substantially. If your parents are senior citizens, you could look at senior citizen health policies offered by some health insurers. Also, opt for the largest possible cover for your parents.

SITUATION 2

Cover comes with the co-pay clause: Copay clause refers to the arrangement where the policyholder (in this case, the employee) agrees to share the claim burden in a pre-defined proportion, with the insurer chipping in with the balance. Co-pay ratios usually range between 10% and 25%. That is, for every claim of . 100 made, the policyholder will have to shell out . 25 (assuming 25% to be the co-pay ratio) while the insurance company foots the bill for . 75. Your plan of action in this case would depend on the terms of the scheme offered by your employer. If the benefits under such plans, particularly the pre-existing diseases cover, are not offered by other individual health policies available in the market, you can consider giving your assent to this arrangement. If the policyholder feels that the group cover is insufficient, he can opt for a top-up cover. Such covers get triggered only after the limit under the basic policy is breached. Now, suppose your company covers your parents to the extent of . 2 lakh, which you feel is inadequate. You can buy a top up policy, of say . 1 lakh, that will become effective only if the entire sum assured of . 2 lakh is exhausted. Going for a top up will be a cheaper option than buying a regular policy. To boost the health cover further, you can look at buying benefit policies for your parents. Offered mainly by life insurers, such policies hand out a pre-fixed sum once the claim is made. Some policies also provide a pre-agreed amount based on the number of days spent in the hospital. The claim approval process is relatively smoother and does not entail submission of original bills and documents. You can make a claim under such policies even if you have already been reimbursed by the corporate cover.

SITUATION 3

The company provides parental cover, but employee has to bear the premium cost:


Again, the terms of the group cover would be key here. Often, health insurers are more generous while dealing with corporate mediclaim policyholders. They get a preferential treatment in the sense that insurers try to ensure that the service offered to this category is satisfactory. A case in point is the withdrawal of cashless facility last year for treatment at certain 'corporate' hospitals. Public sector insurers, who took a strong stand against such hospitals after accusing them of charging exorbitant rates, spared corporate policyholders from this ordeal. Also, as mentioned earlier, the fact that most group health policies cover pre-existing illnesses could work in their favour. Personal health policies exclude pre-existing illnesses from terms of coverage for the initial 1-4 policy years, depending on the insurer.


Making a decision in this scenario calls for a thorough cost-benefit analysis. You need to compare the premium payable and benefits provided vis-à-vis what is available in the market. The employee should also know that the premium he is paying will not be refunded, if he separates from his employer. Also, he would, in most cases, not be able to carry forward special group benefits (like coverage of pre-existing diseases, maternity) to an independent policy that he may wish to buy at that stage. Therefore, it ultimately boils down to the needs of individuals as well as their families and the price tag for the offerings in the market that can meet these requirements.


And, in all cases, even if the employee decides to opt for the group cover, investing in an independent personal policy for parents makes huge sense. After all, the employee can move to another organisation that may not offer parental cover, or, may not offer it on similar terms. Moreover, the parallel retail policy would also act as a top-up in case of a claim exceeding the sum assured under the group policy.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

 

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

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. Tax Saver Mutual  Funds  Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. 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

How much to invest in gold ?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) Let your motivation dictate the share of the yellow metal in your portfolio Enough has been said and written about gold as an investment option. The latest argument is that the craze for gold among Indian households is endangering our country's balance of payments. The policymakers are busy trying to find ways of discouraging investment in gold, but if households keep the common good in mind, they would be paying the market price for gas cylinders as they do for, say, their mobile phone bills. After all, private decisions are driven by private motives. So, how should a household look at gold from its own perspective? Gold is primarily acquired for its merit as a store of value. Even if the worst crisis hits a family, the gold that it holds could be put to use anywhere in th...

Save Tax With Mutual Funds

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       Mutual funds are ideal as long term investment avenues for retail investors. To encourage investments in this avenue, the Government of India offers investors a spate of tax benefits thus ensuring maximum benefit from mutual funds held beyond a year. Sample some of the key benefits and refer to the table for a detailed list of tax rates for different types of schemes ·        Avail deductions under Sec 80C of the Income Tax Act by investing up to a maximum of Rs. 1 lakh in designated Equity Linked Savings Schemes (ELSS). Such investments have a compulsory lock in period of 3 years. ·        First time retail investors in equity with a gross total income of up to Rs. 12 lakh can invest up to Rs. 50,000 in specific MF schemes un...

Mirae Asset Ultra Short Term Bond Fund and Mirae Asset Tax Saver Fund

Mirae Asset Mutual Fund   has renamed   Mirae Asset Ultra Short Term Bond Fund , an open ended debt scheme, to   Mirae Asset Tax Saver Fund   with effect from October 18, 2016. Also, Mr. Sumit Agrawal, the co-fund manager of Mirae Asset India Opportunities Fund (MAIOF) and Mirae Asset Great Consumer Fund (MAGCF) ceases to be the fund manager with effect from October 1, 2016. Consequently, MAIOF shall now be solely managed by Mr . Neelesh Surana while MAGCF shall continue to be co-managed by Mr. Neelesh Surana and Ms. Bharti Sawant. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. ID...

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...

How to manage Volatility in Debt Mutual Funds

Best Debt Funds Online   The debt mutual fund space is creating a lot of confusion among investors, especially the new ones. After a series of cuts in bank deposit rates and small savings, many new investors have started investing in debt mutual fund schemes. However, the complexity of the space is challenging most investors. Top mutual fund managers believe that these investors would fare well if they stick to an asset allocation plan in debt. The best strategy to avoid volatility in the debt space at this point is having an asset allocation Many investors are familiar with the concept of asset allocation. However, most of them do not associate it with debt investments. So, is there a formula? There should be three baskets in which you put your debt investments : short/ultra-short term funds, credit opportunities funds and bond funds . But, at this time, when the interest rates are not headed anywhere, it is good to stay away from long-term bond funds ...
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