Office mediclaim is not sufficient. Here's why

The other day, my insurance agent asked me if I knew of people who would be interested in buying a policy.

So I called a friend and asked her if she wanted to take out a medical insurance policy.

"Why should I?" was her incredulous answer. "My company has already covered me."

Many people make this mistake. They don't take a medical insurance cover because their employer has already done so.

Here are a few reasons why you need a Mediclaim in your name now!

• Mediclaim: What to look for

You could be uninsured for a while

What happens between jobs?  Have you ever considered that?

What happens if you switch jobs and take a month off? If you meet with an accident during this time, you are in for a rude shock.

Let's say you take a sabbatical for a year or six months. What then?

Maybe, in a year or two, you plan to set up your own firm. Why wait till then to take a medical policy in your name? 

Let's say your next job will be as a consultant where you do not get company benefits like medical insurance. So you might as well take one now.

• Is there a tax benefit on medical expenses?

Later, some illnesses may be excluded

The time to get medical insurance is when you are young. Then, you would most likely not have any ailments or sicknesses.

As you age and begin suffering from certain ailments and then go for an insurance cover, these sicknesses will not be covered. You will end up losing out.

Let's say you took a policy in your name when you were 25 years old. Later, when you turned 35, you developed diabetes. All your treatment relating to it will be covered. But, if you took the policy after you turned 35, no treatment relating to diabetes would be covered because the illness/ condition existed before you took the policy.

Since pre-existing illnesses are not covered when you take a Mediclaim policy, go for the policy before they show up.

Also, if you decide to take a policy after you turn 45, you will have to get a medical test done. Which can be a bit of a hassle, but not a great problem. Unfortunately, the ailments discovered during that medical test will not get covered.

• Medical reimbursement and allowance

Why a policy on your name matters

If the employer has a medical insurance, chances are it will not be in your name but part of a group insurance policy; the policy will be in the name of the company and will cover all its employees.

Consequently, you will end up forfeiting a number of benefits.

For every claim-free year, the insurance company will reward you either by decreasing the premium you pay or by increasing your cover. In case it is the latter, your cover may increase every claim-free year till it touches 50% of the current cover.

Let's say you have a medical insurance for Rs 1,00,000.

Year 1: You don't claim any expenses.

Year 2: Cover increases by 5% to Rs 1,05,000.

Now you are getting a cover of Rs 5,000 more but not paying any extra premium.

Year 2: You don't claim any expenses.

Year 3: Cover increases to Rs 1,10,000 (since it is 5% of the base amount of Rs 1,00,000)

This goes on, till your cover touches Rs 1,50,000 while you still pay a premium for a cover of Rs 1,00,000.

What if you have a claim?

Let's say that, with all the extra cover, your Mediclaim is now worth Rs 1,50,000. And then you have a claim.

Now, because you claimed, the cover for the next year will drop by 10% (10% of Rs 1,00,000 is Rs 10,000); your cover will now be worth Rs 1,40,000.

But it will never become less than your original cover of Rs 1,00,000.

If you don't claim for the next year, your coverage again goes up by 5% and the cycle continues. But it will never go higher than Rs 1,50,000 or lower than Rs 1,00,000.

Other freebies

Some companies may decrease the premium, others may increase the coverage. Moreover, if you don't make a claim for five consecutive years, you get a free medical check-up. So take the coverage when you are young.

Say you take it for Rs 1,00,000 when you are 24 years old. If you don't claim any money at all then, by the time you are 30, you will be covered for Rs 1,50,000 at the same premium. And you will get the free medical check-up. Besides, no illnesses will be excluded because you opted for it when you were still healthy.

All these offers are available if the policy is in your name.

So should you have two policies?

If your employer has a policy on your name, stick with it.

Some small firms may insure you individually because they may not have numbers to qualify for group insurance. If this is in your name, then you do not need an additional cover.

If it is a group policy and not in your individual name, take out a policy in your name.

You could split it between your family.

Let's say you are 25 years old and your office has offered you a Mediclaim of Rs 1,00,000.

Check to see if you have put your parents as dependents. If yes, save this office cover for them and take a separate policy for yourself.

In this way, you can be sure that even if you resign, you are still medically covered.