A version of this article was first published on the Financial Express

For a health insurance to become fully effective, it must be maintained without break for at least 3-5 years.

Many salaried employees enjoy the benefit of employer-provided health insurance. This group insurance coverage is often provided at no cost to the employees. However, it is always advisable to maintain your own independent health cover.


Under a typical employer-provided group health insurance, you and your immediate family members will be covered during your employment. But when you leave employment voluntarily or involuntarily, you would be financially vulnerable without your own health plan and at the risk of incurring the heavy costs of any unplanned hospitalisation.


Health and life insurance are best bought when you are young and healthy. As you grow older, your insurance premium costs will increase, and you are also likelier to have a medical episode at an advanced age. Trying to buy insurance on retirement would bring many challenges. For example, when you are 30 years old, the premium for a health cover of Rs 5 lakh would be around Rs 5,500. If you buy the cover at age 55, it will cost you around Rs 15,000. This is also an age when applicants are subjected to health tests before the policy is underwritten.


Through a group plan, your employer tries to provide the best possible coverage at the lowest possible costs. This means that this one-size-fits-all cover has many limitations, the most visible among them being the coverage amount. This amount may be out of sync with modern day healthcare costs, especially for the treatment of any prolonged illness such as cancer. To provide greater coverage and more benefits under a group plan, your employer may need to pay higher premium costs. To get over these limitations personally, you need your own personal health policy with adequate coverage and features as per your needs.

For a health insurance to become fully effective, it must be maintained without break for at least 3-5 years. In this period, most typical exclusions and waiting periods are lifted, and the policy becomes fully functional. Group plans may have some of these waiting periods. If you exit your group plan and try to buy a new policy, your waiting periods start afresh. Thus, you may be at risk while you are under your new policy’s waiting period.

The writer is CEO, BankBazaar.com

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