Make the most of flexi insurance

For most employees in the organised sector, employer-provided health insurance is a given. In some cases, employers also provide group life insurance and/or personal accident covers. But in most cases, the amounts may be insufficient or your policy may offer coverage for an ailment/or condition that is not relevant to you.

In order to address these issues, some employers are now offering flexi insurance programmes whereby employees can customise and structure benefits as per their needs.

By paying an additional premium under flexi insurance, employees can enjoy benefits of group health insurance such as waiver of waiting periods for pre-existing diseases, coverage for more number of ailments and hassle-free processing of claims in their individual health insurance policies, too. Let us see how the flexi insurance programmes work.

Features of flexi insurance programmes

Today, corporates offer need-based insurance created for that customer base, said Anik Jain, CEO, Symbo Insurance Brokers."For instance, my employer buys health insurance for Rs 5 lakh, but I need, say, Rs 25 lakh cover. So the employer negotiates and facilitates this. This helps to address the gap in health cover,'' he explained.

M Suresh, president - employees health and benefits, Marsh India Insurance Brokers, agrees. It is an emerging trend and it is not restricted to IT or allied sectors, Suresh said.

"Flexi programmes also offer the flexibility in terms of the dependents employees can cover. For instance, a single employee need not have the same premium if he has to cover himself. Or if he has a working spouse, he can remove the spouse from the cover and instead buy an add-on personal accident cover," Suresh added.

With insurance costs going up, by four to five times since 2000, the costs incurred by corporates, too, have gone up, said, Jayesh Gadekar, head - health and benefits and innovative solutions, at Global Insurance Brokers.

"As a percentage of the salary, it was probably less than 1% until 2008. Now, it is gone to almost 3.5-4% of salary contribution. This is basically hurting corporates. And this is not a mandatory policy, but companies are giving it more as a market practice because everyone else is giving,'' he pointed out.

Similarly, if your employer provides group life insurance, the coverage is usually two to three times the annual salary, which is insufficient. So, it is better to buy additional life insurance through your employer's flexi programme and ensure you have a sum insured that is 10 times your salary, said Gadekar. "In this case too, the rate will be cheaper and you will not need to undergo a medical test, which you may have to if you were to buy life insurance on your own,'' he said.

Benefits of flexi insurance programmes

If your employer offers the option of buying additional insurance coverage under the flexi programme, opt for it. One benefit is lower premium as against buying an individual health or life insurance on your own. But the bigger benefit is that you will get the same terms and conditions and service as your employer-provided insurance policy.

A corporate will always have a leverage on the premium rather than an individual going and buying a retail top-up health policy, said Gadekar. "They have two advantages. One is the coverage of the base plan, that is, the company- sponsored one, is replicated on the top-up. More often than not, it is the same insurance company which offers the base plan. So the claim processing is smooth. One should look not only at the premium payment but these factors also. There will be a broker who will assist you in settling these claims. In a retail plan, you are more or less on your own,'' he said.

While making a claim under a retail plan, customers may have to face several queries from the insurance company. But if it is facilitated by the corporate, these issues are addressed and grievances are settled quicker.

According to Gadekar, if you buy a retail health insurance plan on your own, it could be 15-25% costlier than buying it through your employer's flexi programme. While Suresh said that the difference could be as high as 40-45% depending on the various features of the product.

The other important factors to consider is the coverage, pointed out Suresh. "No matter how much innovation has taken place in the retail place, there are still restrictions in room rent, waiting period and restrictions in terms of ailments that can get covered. But when you buy flexi programme, it pretty much mirrors the group construct,'' he said.

Now with portability from group policies to individual policies possible, someone who has bought a higher health cover and has spent enough time in the organisation can port the policies and get the advantage of waiting period for the pre-existing diseases.

Some corporates offer facilities where they facilitate motor insurance for vehicles owned by the employees. In such cases too, employees can be assured of better rates and facilities like zero depreciation and road assistance, for which they may otherwise have to pay extra in their individual motor policies, said Jain.

Another advantage of buying a top-up plan through the flexi programme is that you can use it to pay for any co-pay in the base plan provided by your employer.

"For example, if a company has 10% co-pay in the premium and if I buy an add-on cover, then whatever is the company's co-pay in the base plan can be reimbursed under my add-on,'' Suresh explained.

Conditions to keep in mind

When corporates initially started offering flexi programmes, insurers faced the problem of anti-selection. This means that only those employees who were certain they would make a claim would opt for them. So, now insurance companies and corporates have put in conditions such as putting a lock-in period or restricting the amount. For instance, if an employee purchases a top-up of Rs 3 lakh through the employer's flexi scheme for one year, he/she cannot opt out of it the following year or reduce the amount to Rs 1 lakh.

Despite buying medical coverage and a top-up through your employer's flexi programme, it is advisable to buy individual health insurance on your own.

"After retirement, about 60% of your savings post retirement would be spent on health and health-related activity and in the corporate world, you are covered until 60. So suddenly post-retirement, you end up having no coverage at all. Hence, you should buy a retail plan when you are young and built up an additional sum insured over a period of time,'' Gadekar said.

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