Extra cover for elderly dependants

The cost of hospitalisation could be higher under company’s group insurance policy

A resident of Rourkela, Sudhir Kumar is content with his health insurance policy. The 31-year-old argues that since age and health are on his side, he does not need an extra health cover.

“I have a life insurance policy, and my employer provides me with a health cover,” says the software engineer. His parents (father aged 57 and mother 51) are dependent on him. Kumar’s wife has a cover from her employer.

However, in the last one year, most private sector employers across sectors such as information technology, manufacturing, etc have either stopped covering parents, or cover them on a co-pay or shared basis.

 

In addition, if you seek cover for parents in the company’s scheme, the premium is increased, as well. Sudhir Sarnobat of Medimanage Insurance Broking, a corporate insurance broker, says, “Premiums on cover for parents under employer-provided health plans have increased substantially.”

According to Medimanage, the premium per Rs 2 lakh in a group policy would be Rs 20,000 for a 30-year-old’s family of six (self + spouse + 2 kids + parents). Out of this, Rs 12,000-14,000 has to be paid by the employee for parents, due to the high risk of claim involved.

In comparison, for a sum assured of Rs 2 lakh with Bajaj Allianz’s Health Guard family floater, Kumar would pay Rs 8,978 annually (self + spouse + child). Bajaj’s Individual Health Guard would charge another Rs 15,236 for his mother and Rs 17,879 for his father. That is, a total of Rs 42,093.

Yes, the cost is double in the case of a family floater. But here’s the catch. Say there is a claim of Rs 2 lakh because one of the parents falls ill, Kumar would have to shell out Rs 40,000 under the 20 per cent co-pay arrangement.

In other words, besides the premium of Rs 20,000, there would be an additional cost of Rs 40,000, whereas in a family floater, the entire cost will be borne by the insurer without any financial burden on the person.

Insurance companies say because of the co-pay model, policyholders should opt for a family floater. Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance, says, “Customers would feel the pinch of the co-pay model, while lodging large claims.” Therefore, those who may have to claim for parents’ hospitalisation should not opt for parents’ cover under group policy.

Financial planners, however, say a company health policy should be taken along with a family floater for those with elderly dependants. This would help in ensuring that one has adequate cover, in times of crisis.

Say, Kumar has two policies — A company policy with a premium of Rs 20,000 (sum assured = Rs 2 lakh) and a family floater with a premium of Rs 42,000 (sum assured = Rs 2 lakh).

In case, any elderly dependent is hospitalised, which is quite possible because of their age, he has two options. If the bill is not high, he can use the company’s insurance. Otherwise, he can opt for the family floater.

There are many advantages of the group insurance policy, as well. “The best part about a group health policy is that there is no waiting period applicable,” says Sarnobat. On the other hand, a personal cover helps when when one is shifting jobs.

Family floaters offer sum assured of up to Rs 10 lakh. For increasing the cover, top-ups are available with companies such as Star Health and United India for up to Rs 10 lakh.

Financial planners recommend a sum insured of at least Rs 2 lakh for those up to 35 years, Rs 3 lakh for those up to 45 years and Rs 5 lakh for those above 45.

And, there is a tax advantage. According to Section 80D of the Income Tax Act, the premium paid for medical insurance is deductible from your income up to Rs 15,000 a year. However, if you are a senior citizen (56 years or above), the limit increases up to Rs 20,000 a year. Thus, you can deduct up to Rs 35,000 from your taxable income for the medical insurance premiums paid.