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Personal Health Insurance
The personal health insurance policy, which is also referred to as retail health insurance or individual health insurance, pays for medical expenses of an insured client because of an accident, sickness, or illness in excess of the sum insured maximum in exchange of a small fee. The insured customer would completely own a personal health insurance policy as they would pay the premium and enjoy the benefits. Personal health insurance is usually taken for a short term, i.e., one year, or for a long term, i.e., two/ three years, after which the policy can be renewed periodically. Insurance companies reward customers with a no-claim bonus at the time of renewal in the form of an increased sum insured if no claim was made during the previous policy period.
The premium of a personal health insurance policy would be calculated based on various factors such as the applicant’s age, coverage required, zone of location, health conditions, lifestyle habits, etc. The major thing that decides the premium is the applicant’s age; the higher the age, the higher the premium, as more diseases are associated with increased age. Taking a personal health insurance plan at a very young age would reduce the premium payable, increase the chance of a claim after the waiting period, increase the accrued no-claim bonus, etc.
Employer-Sponsored Health Insurance:
Employer-sponsored health insurance, also known as group health insurance, covers the medical expenses of the insured members in case of hospitalization due to an accident, illness, or disease. Group health insurance can be employer-sponsored, employee-employee contribution-based, or only employee-contributed insurance policy. In the case of an employer-sponsored policy, all the premiums would be borne by the employer of the organization you are working for, and you get to enjoy the health insurance benefits. The employee-employer contribution policy is one in which both the employee and the employer contribute towards the premium amount; the contribution amount varies from company to company and completely depends on the parties’ mutual understanding. In both these cases, the terms and conditions of the policy, such as coverage, exclusions, etc., would be decided by the employer who is paying the premium.
In the case of an employee-only contribution policy, the employees would bear the entire premium amount, and the employer would act as the facilitator. The premium amount would be divided among the employees as the premium would be calculated per person, and the employees could contribute as required. Here, the entire decision on the terms and conditions of the policy would rest in the hands of the employees as they are paying the entire premium. Employees can decide to include or not include their family members under the group health insurance plan. Employers would deduct the premium amount from the employees’ salaries periodically.
|Item||Personal Health Insurance||Employer-sponsored/ Group health insurance|
|What is it?||Personal health insurance is usually taken by individuals for themselves and their family members.||Employer-sponsored health insurance is usually taken by the employer for their employees and in some cases could be extended to cover their families.|
|Who is covered?||All the family members of the applicant can be covered under the policy||Who should be covered would be decided by the employer as he/she is paying the premium.|
|Who pays the premium?||Individual customer pays the premium and owns the policy||Employer pays the entire premium and the employee enjoys the benefits of the policy.|
|How is the premium calculated?||The premium is calculated based on the age of the eldest member and the sum insured chosen. Higher the age and sum insured, higher would be the premium.||The premium would be based on the age of the members as well as the sum insured chosen. Various sum insured options can be chosen under the employer-sponsored group health insurance plans.|
|Customization||Personal health insurance policy can be customized as per the needs and requirements of the applicant. Add-ons can be availed on payment of additional premium. Customization can be done only at the time of renewal or at the start of taking the policy.||Employer-sponsored group health insurance cannot be customized as per the needs and requirements of the employees as the premium is being paid by the employer and the decision authority would be with the employer. It would be practically impossible to take into consideration the decision of all the employees in the organization before taking the group health insurance plan.|
|No claim Bonus||No claim bonus would be given for every claim free year as a percentage of the sum insured. The no claim bonus per year would range from 10% to 50% with an overall no claim bonus not exceeding 100%/150% of the basic sum insured. No claim bonus could be decreased in the||There is no claim bonus in the employer-sponsored group health insurance policy. Even if there is no claim during the policy there would be no bonus added to the policy at the time of renewal.|
|Copayment & Sub limits||Co-payment and sub limits vary from one insurance plan to another in personal health insurance. Customers can opt for voluntary copayment and sub limits in return for reduction in premium.||Copayment and sub limits are entirely optional in all the employer-sponsored group health insurance plans. Insured customers can opt for copayment and sub limits to reduce the premium payable.|
|Lifelong renewability||Lifelong renewability option would be provided by the insurance company. Customers would be automatically changed to another similar product if the existing product is discontinued.||Lifelong renewability option is not available in employer-sponsored group health insurance plans as the insurance company can refuse to renew the policy stating various reasons. Either party is not bound to renew the policy.|
|Pre-existing waiting period||Pre-existing waiting period is mandatory and would range from 1 year to 4 years. Customers can opt for a reduced waiting period on payment of additional premium in the form of add-ons.||Voluntary under employer-sponsored group health insurance plan. Opting this would reduce the overall premium but changes the basic essence of taking a group health insurance.|
|Specific disease waiting period||Specific diseases waiting period is mandatory which ranges from 1 year to 2 years. Customers can opt for a reduced waiting period on payment of additional premium in the form of add-ons.||Voluntary under employer-sponsored group health insurance plan. Opting this would reduce the overall premium but changes the basic essence of taking a group health insurance.|
|Initial waiting period||Initial waiting period of 30 days is mandatory except for accidents.||Voluntary under employer-sponsored group health insurance plan. Accidental hospitalization would be covered even if it is opted within the first 30 days period.|
|Maternity waiting period||Mandatory in some cases and would range from 9 months to 4 years.||Voluntary under employer-sponsored group health insurance plan. Opting this would reduce the overall premium but changes the basic essence of taking a group health insurance.|
|Family inclusion||Family can be included on payment of additional premium. The decision to include family rests with the insured customer. Family can be added only during the renewal of the policy. Mid term additions are permitted only in certain cases such as marriage and child birth.||Family may be included on payment of additional premium. The decision to include family rests with the employer. If the policy is taken only for employees, then family members cannot be added during the policy period. Family can be added only during the renewal of the policy. Mid term additions are permitted only in certain cases such as marriage and child birth.|
|Sum Insured options||Various sum insured options are available for the insured customer. Each member of the policy can have varying sum insured. Entire family can also have a single sum insured which is known as family floater policy.||In employer-sponsored health insurance various sum insured options are available for the insured customer. Each member of the policy can have varying sum insured. Entire family can also have a single sum insured which is known as family floater policy.|
|Cashless Claim Settlement||Cashless claim settlement is available at any of the network hospitals in personal health insurance plans.||In employer-sponsored group health insurance plans the cashless claim settlement can be availed at any of the network hospitals.|
|Reimbursement Claim Settlement||Reimbursement claim can be done by submitting all the required documents within the stipulated time period. Reimbursement claims taken from network hospitals may be subject to copayment.||In employer-sponsored group health insurance plans, reimbursement claims can be done by submitting all the required documents within the stipulated time period. Reimbursement claims taken from network hospitals may be subject to copayment.|
|Long term policy||Policy can be taken for a long term i.e. up to 3 years.||Policy can be taken for 1 year only and renewed based on needs and requirements.|
|Portability||Personal health insurance Policy can be ported by submitting a port request to the target insurance company 45 days before the expiry of the policy.||There is no concept of portability in employer-sponsored health insurance plans as there is no obligation on the customer to continue with the same insurance company at the time of renewal. Insured customers can simply decide to renew the policy with another insurance company.|
|Pre-policy medical checkup||Personal health insurance policy may require pre policy health checkup depending on the type of the health insurance plan.||There is no requirement for pre-policy medical checkup under employer-sponsored group health insurance plans.|
|Tax Benefit||Insured customers can avail tax benefit up to Rs.1 Lakh under Sec 80D of Income tax act. Tax benefits would also be applicable to certain riders such as critical illness cover.||Income tax benefits cannot be availed by the insured members in employer-sponsored group health insurance plans as the premium is paid by the employer.|
|Eligibility||Eligibility conditions such as Resident of the country, minimum age and maximum age should be satisfied in addition to other conditions.||The basic eligibility to take the employer-sponsored health insurance plan is the person should be actively working in the organization of the employer. Most companies take group health insurance only for full time employees.|
|Add-ons choice||The choice to decide add-ons would be vested with the insured customer. Insured customers can avail the add-ons on payment of additional premium.||The choice to decide the add-ons would be with the employer. Employers can decide to avail add-ons on payment of additional premium.|
|Premium payment options||Premium can be paid at once or in installments as per the convenience of the insured customer.||Premium can be paid at once or in installments as per the convenience of the insured customer.|
|Buffer||There is no concept of a buffer in personal health insurance plans.||Buffer sum insured can be availed by the employer on payment of additional premium. Buffer sum insured would be in the name of the employer and employer can decide to whom the sum insured would be allocated.|
|Reinstatement or Refill of sum insured||Personal health insurance plans have a concept of reinstatement or refill of sum insured in case of exhaustion of the base sum insured including the no claim bonus. The reinstated sum insured can be either used for the same illness or different illness which depends on the plan chosen by the insured.||There is no concept of reinstatement of sum insured in the employer-sponsored group health insurance plans.|
|Pre & Post Hospitalization expenses||Covered as per the terms and conditions||Covered as per the terms and conditions|
|Alternative treatments||Alternative treatments such as Ayurveda, Yoga, Unani, Siddha and Homeopathy are covered up to the sum insured limit.||Alternative treatments such as Ayurveda, Yoga, Unani, Siddha and Homeopathy are covered up to the sum insured limit.|
|Day care procedures||Covered up to sum insured as per the terms and conditions||Covered up to sum insured as per the terms and conditions|
|Domiciliary hospitalization||Covered up to sum insured as per the terms and conditions||Covered up to sum insured as per the terms and conditions|
How to Decide the Right One?
- Personal health insurance is mandatory for every person, and the sum insured or coverage can be decided based on affordability.
- Group health insurance is a supplement to the personal health insurance policy and is not complementary. Having an employer-sponsored group health insurance plan would increase your health insurance coverage, which is beneficial if there is a personal health insurance plan in place
- If you are starting your career, you will get an employer-sponsored group health insurance plan. As we advance, you should consider taking a personal health insurance plan to cover your and your family’s needs in case of medical emergencies.