Three Options for Retirees to Remain Covered

Spiralling costs of healthcare has been a major concern mainly for senior citizens.  Growing rate of medical inflation is making senior citizens worry about their financial security. There must be a proper financial planning which helps to achieve various small or big goals of life. A right mix of investment and returns can create a perfect security cover. Pre-thinking about any financial situation and pre-preparing for it can take you away from many financial hassles.

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    According to a latest report released by KPMG and Assocham, the cost of treatments like angiography and gall bladder removal has shot up by 50-60% between 2007 and 2012 with the medical inflation growing at 15% per annum. Indeed, 86% out-of-pocket healthcare expenditure in 2011 has dominated their expenditure. Health and financial insecurity are ranked among the key fears according to the survey in India in which 38% of elder respondents favoured the same. Numerous senior citizens in India lack the resources to finance treatment which is called as Low Insurance Penetration.

    What is actually the main trigger for the insecurity? According to financial experts, the nonexistence of ample health insurance is the main trigger especially for those individuals who are banking on their employers’ group health insurance scheme. The head of general insurance and principal officer of Emkay Insurance Brokers, Divya Gandhi said that senior citizens suddenly find themselves without a security cover on retirement. The reason behind this is that at the time of retirement, it is difficult to have a new cover due to firm medical tests and elevated premiums. The retirees thus are left with three options to make themselves secure from this situation:

    • First option if permitted is to continue with the employer’s group cover by paying off the complete premium.
    • Second is to take an individual cover with the same insurer who is giving the group cover.
    • The third option is to take an individual cover from any insurer.

    The best option among all is the first one as it will not let the benefits of the existing policy go waste. There will be no waiting period of three or four years for pre-existing diseases in this scenario. Gandhi said that if company permits then one must go for this option but you should go through the terms and conditions to know whether all the continuity benefits will accumulate to you or not. In addition, it will help the insured to save money and also claim settlement becomes smoother. But only few organizations allow this option.

    In the second option according to IRDA portability guidelines, the insured can shift from group insurance to individual cover of the same insurer. Initially, the insured needs to take the cover from the same insurer but later on he can switch to any other insurer. The general manager of New India Assurance, Segar Sampath kumar said that the terms and conditions of an individual policy could be different from those of the group insurance. This option also saves the benefit of pre-existing diseases cover if the coverage period under group policy surpasses waiting period stipulated in the retail product. Though, the premiums will be a bit higher than the group insurance policy. According to the CEO of Vantage Insurance Brokers, Arvind Laddha, the premiums in first option could be unstable as they will be determined the experience of claims of the complete group. But premiums will be more stable if the insured switches to individual cover.

    If the insured chooses the third option then he must be prepared for the medical check-ups, sub-limits and co-payments. In this option, you will have to carry the burden of loading as well as higher premiums. Apart from all this, there is a possibility to get a denial of getting coverage. Laddha pointed out that going through the complete policy wordings is must as the insurers keep on introducing minor changes in terms of restrictions & benefits both to make their plans different from others. If a plan demands less premium then there must be some limitations like room rent limits, cap on surgeon charges, sub-limits on ailments and many others. The plan even with low premiums could prove expensive in case of a claim. So, be secured even after retirement by taking wise decisions. 

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