A number of our readers who write in for financial advice tell us about their life insurance policies. But nearly all of them will state they do not have medical insurance. The reason? Their company covers them.
That is great. But here are a few reasons why you must consider getting a medical cover in your name even if you have an office insurance.
Plan to quit your job?
Even if you quit this job to take another, an insurance cover may very well be part of the deal in your new company.
But what happens during jobs? You may just have a 15 day break or a one month break between jobs. So the possibility of falling sick or meeting with an accident at that time is almost nil. Insurance, however, is all about covering the risk that something may happen.
Or, you may take a six month or 12 month sabbatical. During this time, will you stay uninsured?
Plan to move into consultancy?
What if you plan to quit in a few years time and become a consultant? Then, you will not get the benefit of employee insurance.
Of course, you can wait till you resign to take the insurance policy. But, if you wait until later, you may get some illnesses that will not be covered. So it is wise to take it when you are young and have no illnesses at all.
That way, even if you develop diabetes when you are 35 but took the policy when you were 28, you will be covered for it. Once you take a policy after 45, you will need to get a medical test. If the test reveals you have a particular illness, it will not be covered.
Moreover, there are lots of benefits when you take a policy in your name.
For instance, for every claim-free year, your cover may increase slightly. Or your premium may decrease slightly. Or, if you do not claim for, say, five years, then you get a free medical check-up.
Have uninsured family?
All right, you have no intention of ever taking a sabbatical or becoming a consultant. So you don't need the insurance. But what if you have a large family?
Normally, the office insurance will restrict the number insured persons in your family to around four, including the employee. So, if you have parents, a spouse and a child, then that will be a problem. Because that will total to four (parents, child, spouse) dependents, plus yourself.
In such an instance, you might as well take out an insurance policy for yourself and reserve the office one for your family.
Sure, your spouse can take one, but if you take it in your name, you will get the tax benefit.
A medical insurance premium payment is considered a deduction from your gross total income. The premium paid is deducted to finally arrive at the next taxable income. The maximum amount that is considered for deduction is Rs 10,000 (goes up to Rs 15,000 for a senior citizen).
A friend of mine lives with his parents, who are both uninsured. His office gives him and his dependents a cover of Rs 4,00,000 and covers all of them, including himself.
Yet, he has taken his own cover. He keeps the office cover for his family and he uses his own life cover. So should he fall ill, he will not touch the Rs 2,00,000 cover but save it for his parents who are more prone to illness.
The problem with medical insurance is that, after a particular age, no cover is given. Depending on the company, insurance is only applicable till one is 75 or 80 years old. For instance, the New India Assurance Company offers a cover till you are 80 years old. But the National Insurance Company stops at 75 years old. Till then, you pay your premium and get covered. After that, no cover is given. So when you really need the insurance, it is not available.
Some insurance companies do offer an insurance cover when you cross that age. This, however, comes at a cost.
You will have to pay what is called a loading, which is a surcharge or extra fee over the premium. So, if it is 10%, then you will have to pay 10% more on the premium.
So, if your parents are not covered, you can take a separate cover for yourself and reserve your office cover for them.
To read more about medical insurance, read Mediclaim: What you need to know.
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