Bank-Offered Group Health Insurance Policy: Explained!

Bank Offered Group Health Insurance

Unlike popular belief, group health insurance is not only offered by employers to their employees. Banks also offer group health insurance to their account holders, borrowers, and depositors as per the bank’s policy. There are many private as well as public sector banks that offer group insurance plans to their account holders.

In the past few years, banks have tied up with multiple insurers, mostly the public sector general and health insurers, to offer group health insurance plans at low premiums. Thus, bank account holders have multiple group insurance options to select from. 

Bank-offered employer employee insurance can be an economic option for those exposed to higher risks, making them pay a higher premium than usual. This may include senior citizens or people in a higher age bracket, those having a certain pre-existing condition, or those looking for cheaper options as they are not insured or are underinsured.

In 2020, the Insurance Regulatory and Development Authority of India (IRDAI) introduced the concept of portability, wherein the policyholder holders of indemnity-based plans can port from one insurance company to another within the same bank.

Features of Bank Offered Group Health Insurance

Some of the features include:

• The sum insured or the coverage amount is usually fixed by the insurer. In some cases, the account holder can choose the sum insured from the available options.
• The premium is to be paid by the account holder. Even though a bank offers group insurance, the account holder is the policyholder (unlike corporate insurance) and is thus eligible to pay the premium and avail of tax benefits under section 80D.
• The premium rates are quite low compared to individual plans.
• Dependents are not always covered; however, coverage can be extended to them by paying an additional premium.
• No medical check-up is needed.
• Pre-existing diseases are mostly covered from day one.

Disadvantages of Bank Health Insurance

While pricing may be a positive aspect, here are a few major concerns with the bank offered group health insurance.

• In the case of bank mergers (quite a few have occurred recently), there is no guarantee that the acquiring bank will have a tie-up with the existing insurance provider. In that scenario, the account holder might have to port it to an individual policy which may lead to an increased premium amount.
• A bank-facilitated group insurance policy in many cases have a waiting period, which is not the case in most employer-provided group insurance.
• These policies also exposed to room rent sub-limits.
• The insurers have the right to cancel the group plan midway as the negotiating parties are the bank and the insurer. So, if it is a loss-making portfolio, the insurer may cancel the plan altogether.

Conclusion

It is always better to have sufficient health insurance and individual plans are the best buy for that case. An employee group insurance is a different aspect as it adds up your coverage level without you having to pay for a premium. But purchasing an additional group policy from a bank may not always be the best choice.

FAQs