IRDA portability rules allow an individual to convert the group insurance cover offered by an employer to an individual policy from the same insurer. During the 6th Bangalore DIY investor meet (July 31st 2016), Mr. Srinivasan Sundarajan pointed out that he had made such a switch. When I requested him to recount his experience, pros and cons of converting a group cover to an individual health cover, he readily agreed. Over to him.
Switching Group Insurance to Individual Insurance – My experiences
Well, there comes a time in our career, when most of us decide to switch out of an organization. Many of us would have lived with the comfort that our organization took care of the risks – a group insurance policy for life, health.
Now when I step out of that comfort, what happens? More so when I decided to get out of the corporate world. This meant that there’s no new employer with a group insurance policy so to speak.
Well, I had been thinking for a while about stepping out of the corporate world. I had done my enquiries about the portability of my group insurance quite in advance. I got the confirmation, that it was possible to port it out when I leave the organization.
I had the cover for me, my wife and kids. In addition, the group insurance scheme allowed me to cover my mother, which I had opted for.
About two years before I left, the company had introduced an ability to increase the coverage, by paying an additional premium. I had availed of the same for my mother and my family. [Don’t get me wrong, my mother is an integral part of my family, as I see, but for the insurer and my company I guess it is different!!]
I initiated the porting through my HR organization. The process had to be initiated 45 days before the D-Day. I got connected to the officer in the insurance company, who was handling my company. He was a very able and helpful person. He gave me the options and the premium I had to pay for the various sum assured amount.
The first thing I found – I could have the cover for my family, at the level, I had in the corporate. There were no issues. The only thing is that the premium for an individual policy is definitely higher than the group cover.
Here is what I found next – I could not retain the full cover for my mother. The individual policy had a cap of 3 Lakhs. So I had to downgrade my mother’s cover from 10 Lakhs to 3 Lakhs! She’s a senior citizen, so I have to now live with the reduced cover. So the learning from this –
“If you can cover your parents with a super top-up outside, before they become old, please do so. You can still avail the base cover from your corporate. This way you can optimise your premium and also avoid having to reduce the coverage at their old age.”
As far as pre-existing ailments, there was no issue (not that it made any impact in our case). When the insurer issued my family floater policy and my mother’s policy, he marked the date when I was first insured over 10 years prior to that. So that took care of the IRDA 4 year rule for anything. This also meant there was no additional loading of any sort.
As far as no-claims are concerned, well there was nothing I could do about it.
The other thing I did was to ensure that I got my personal cover initiated about a week prior to my departure from the organization. After all, the whole purpose of insurance was to cover a risk, and I did not want to be in a situation where there was a gap between the expiry of my group cover and the start of my personal cover. This is the other recommendation I have for those of you who are planning to switch out – Have a small overlap rather than a gap, to avoid Murphy’s Law!
Please note, that this was my personal experience. I am not going to state that this is how every insurer will work. I will share in another blog, my experience after I had my individual policy in another blog…
Please join me in thanking Mr. Srinivasan for his kind generosity.
Now over to you. What are your impressions about switching corporate group cover to an individual policy from the same insurer?
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via: Feedburner
- We are also on Google PlusandPinterest
Do check out my books
Get it now. The Kindle edition is only Rs. 199.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantMy second book is now only Rs 199 (Kindle Rs. 99) Get it or gift it to a youngearner
The ultimate guide to travel by Pranav SuryaThis 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)
Free Apps for your Android PhoneAll 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)