Should I buy personal health insurance if I have company health cover?

A question that is often asked is, “should I buy a personal health insurance policy if I have a company health cover?” The standard answer to this* was, “yes, you should, as you could lose the company cover at any time”.

* The answer if often laced with conflict of interest as the guys who say, “yes, you should” are associated with insurance companies.

The reason I would like to re-open this discussion is because of IRDA portability rules that state that individuals (along with family members) part of a group policy can shift to a personal health cover (individual or floater) offered by the same insurer. See section 10.2 here

We saw an instance of such a shift in yesterday’s post by Mr. Srinivasan Sundarajan: Group Insurance Portability to Individual health insurance cover.

Does this mean that I do not have to get personal health cover since I am covered by company cover? Does this mean that all I need to do is to get a super top up family floater over the company cover?

In an ideal world, the answer is yes (assuming that the company can always afford the group health cover). In a practical world, I am afraid, the answer is a no.

There are three reasons for this:

1:  Corporate employees can be laid off: And such lay offs can be sudden. A group health cover requires us to interact with the company HR division. Will the HR division assist in a switch in case of a lay off? The group cover may still be extended for a while, but can a switch happen then?

This a grey area, at least to me. If someone can provide some information on this, it would help.

2: Health insurers are refusing the switch: Mr. Sridhar Vetapalem messaged me that many insurers are saying a switch from group cover to private health cover is not possible! This is incorrect. A switch is very much within the nearly 5-year old rule and of course, we saw the real life example of Mr Sundarajan.

The problem is, if health insurers refuse the switch, an employee cannot fight them directly. The HR will have to help. Will they?!

Group insurers can change from year to year. So a switch-friendly may be replaced by a switch-unfriendly insurer when we wish to apply!

3: Beware of underwriting rules! As pointed out in Health Insurance Portability: What you need to know before porting, portability is not a right and can be refused.

The switch request can be denied after accepting the request and assessing the risk for the insurer. As mentioned above. the problem now is that many insurers are refusing outright, saying it is not possible. This is incorrect.

Assuming that the insurer accepts the switch request, the age of the people covered will be an issue. As pointed out by Mr. Sundarajan, his mothers cover reduced from 10 lakh in the group cover to 3 lakh in the private cover.

There is no need for the insurer to offer the same level of cover as in the group policy because underwriting rules apply.

If any of the applicants have pre-existing diseases, the switch can be denied.

Therefore, assuming that company cover with a super top up is sufficient can be dangerous. When we leave employment, we may either not have a base cover or a reduced one.

Therefore from a practical point of view, buying a small private cover while young and in employment still seems like the way to go. A super-top up can be included depending on affordability (that in turn decides the deductible).

What do you think?

Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media


Do check out my books


You Can Be Rich Too with Goal-Based InvestingYou can be rich too with goal based investing

My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create customg solutions for your lifestye!Get it now.  It is also available in Kindle format.

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Create a "from start to finish" financial plan with this free robo advisory software template


Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

About Freefincal

Freefincal has open-source, comprehensive Excel spreadsheets, tools, analysis and unbiased, conflict of interest-free commentary on different aspects of personal finance and investing. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. We do not accept sponsored posts, links or guest posts request from content writers and agencies.

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

9 thoughts on “Should I buy personal health insurance if I have company health cover?

  1. You are right, Pattu.
    Even by definition, portability is merely credit of waiting period already served. Nothing more. Insurer can refuse to issue cover or hike premium.
    Portability, in my opinion, is only for young and healthy people. There will always be a few exceptions though.
    To not purchase a personal cover, hoping that you will be able to port to a personal cover later, is not a wise approach.

  2. My wife works as an HR Head for an MNC in India and even she couldn’t do the switch from group to personal medical insurance the last time she changed jobs.

    Her Insurance Broker showed no interest in responding to her once she found out that my wife was serving notice. Her group cover at that time was with National Insurance and in hindsight it was good that we couldn’t do the conversion as I figured out later that National had a whole host of restrictions that do not exist in their group cover including if I remember correctly, paltry room rent, co-pay and so on. Group cover works very differently as they change the premium every year depending on the claims the previous year and I think there are very few insurers in that sector.

  3. The most important thing to do is to ask this question right at the beginning, about the ability to port the policy. So at least it allows you to know what is possible or not.
    The other thing to look out for – is when your company switches the insurer (which can happen).
    As most of them have pointed out, this is not yet in a perfect state – where you should be automatically entitle to switch the policy from group to individual/ family floater. Till such time we can get IRDA to mandate this (as different from porting it to a different insurer), this will have uncertainties.

  4. Had I known this few years back, I could have saved a lot on hospital expenses. I switched employer without considering this benefit and currently I neither have insurance for my dependents under group insurance nor can I take one because it is being rejected.

    Just as “starting early” with investment pays off, “having health insurance early” will save potential expenses towards hospitalization

  5. It total depend upon the company health insurance whether it cover employee families or not. because some insurance company do insurance employee family also i.e spouse children. You need check with insurance company. according you plan for same, also if buy individual policy sum insurer amount according to you will can buy but if company provide the health cover then sum insurer amount will less,

Comments are closed.