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

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...

JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund

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 JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund    The new fund offer opens for subscription on 16 th June and closes on 30 th June. JP Morgan Mutual Fund today announced the launch of its open end fund of fund called Emerging Markets Opportunities Equity Offshore Fund. The fund will invest in an aggressively managed portfolio of emerging market companies in the underlying fund - JPMorgan Funds - Emerging Markets Opportunities Fund, says a JP Morgan press release. Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team (Singapore), JPMAM said, "Emerging markets have been out of favour for several years, as growth decelerated and earnings struggled. However, in a world of globalisation, we believe that EM will eventually re-couple with DM, leading to the long-aw...

Nifty F&O

  1. What is a straddle? A strategy using Nifty options usually before a major event or when one is uncertain of market direction. Comprises purchase of a Nifty call and put option of the same strike price. Usually strikes are purchased closer to the level of the underlying index. 2. What is better ­ buying or selling a straddle? It depends.Implied volatili ty of options, or near-term expectations of price swings in an un derlier like Nifty , usually peaks before an event and falls when the outcome plays out ­ like Infy re sults in past years. However, once the event plays out, a sharp rise or fall in Nifty could result in price of the straddle rising ­ benefiting buy ers. But, normally , those who sell or write options charge hefty premiums from buyers in the hope that fall in volatility would ensure the options end out-of-the-money, hurting buyers. 3. So, do straddle sellers end up winning most of the time? Yes. That's invariably the case when market volatility is trending on the...

UTI Equity Fund Invest Online

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   UTI Equity Fund   Invest Online UTI Equity is a large cap-oriented fund with assets under management worth Rs. 2,269 crore (as on June 30, 2013). The fund was originally launched in May 1992 as UTI Mastergain and is benchmarked against S&P BSE 100. A couple of years back the name of the fund was changed to UTI Equity Fund and many of the smaller funds of UTI were merged into this fund. Performance The fund has outperformed its benchmark as well as the equity diversified category average in the last one-, three- and five-year periods. It has repeated the same in 2013 (as on May 31). Since its inception the fund has delivered an impressive 26 per cent compounded annual growth rate which is superior to its benchmark performance in the same period. Y...

Good time to invest in Infrastructure 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   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...
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