Do not buy a top-up policy for your company mediclaim!

Published: August 22, 2015 at 8:06 am

Here is why you should not buy a top-up policy for your company mediclaim! If you are puzzled by that statement, let me clarify.

Mediclaim or a health insurance policy is a risk mitigation (not prevention!) tool.  A “company mediclaim”, or a group health policy taken by your company is a perk. It is pretty useful and one should use it when required .. without forgetting that it is a perk.

Meaning it can be modified or withdrawn at any time and will obviously change character when you change jobs. A group policy is a new policy taken each year by the management with the same insurer or a new insurer.

A risk mitigation tool should be a lot more permanent sounding than that!

The purpose of this post is to suggest:

1) Get a standard health insurance policy in addition to your company cover.  This could be an individual policy (preferable, if you can afford it) or a floater policy.

2) Use your company cover when required. If the expenses exceed the company cover, you can always use your personal cover to claim the remaining amount – either as reimbursement in cases expenses are unknown or via cashless by sending two applications (company+personal cover) at the time of hospitalization.

3) A top up cover, specifically a super top-up cover is certainly a good thing to have. However, top up your personal cover and not your company cover.

The reason for that is, super top-up policies kick in after a threshold. That threshold should be something that you control and not your employer.

As long as you are employed (employable!), you could probably get away with a super top up cover (not just top up) to your company cover. However, if you are laid off for an extended duration, cannot work due to disability or due to family commitments, or perhaps would like to freelance, you would be left hanging with a threshold.

It is prudent to buy a personal health cover at a young age (when the premium is typically low) and gradually increase the cover each year. If you delay buying such a policy, it may so happen that due to ailments, you or your dependents may be denied cover. The premium may be heavily loaded or the policy will be offered only on conditions of co-payments.

Risk mitigation should be layered the right way: The personal cover is indispensable and is your first layer of protection The super top is your second layer.

Top up your personal cover and not your company cover.

If you are looking to buy a personal cover, this post might be of help: How to buy a health insurance policy?

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About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements write to pattu [at] freefincal [dot] com
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