Health insurance is a crucial aspect of financial security, ensuring that medical expenses don’t drain your savings. Many companies offer corporate health insurance as a benefit to employees, covering hospitalization costs and providing tax advantages to the employer. However, is employer-provided health insurance enough?

The truth is, while corporate health insurance offers some benefits, relying solely on it can leave you financially vulnerable. It has limitations, including low coverage, job dependency, lack of customization, and no post-retirement benefits.

In this article, we’ll explore the shortcomings of employer-sponsored health insurance and why investing in an individual health insurance policy is essential for long-term security.

What Is Corporate Health Insurance?

Corporate health insurance, also known as group health insurance, is a policy that covers employees of an organization under a single plan. In many cases, the employer pays the premium, and coverage may extend to dependent family members, such as a spouse, children, and parents.

Key Features of Corporate Health Insurance

• Cashless hospitalization at network hospitals.
• Coverage for pre-existing conditions (after a waiting period).
• Maternity and newborn benefits (in some policies).
• Annual health check-ups (in select plans).
• Tax benefits for employers

While these features seem beneficial, there are major limitations that employees often overlook.

Why Corporate Health Insurance Is Not Enough

1. Limited Sum Insured May Not Cover Rising Medical Costs

Most corporate health insurance policies provide a sum insured of ₹1.5 lakh to ₹5 lakh, which may seem sufficient for minor illnesses. However, with medical inflation reaching 14% in 2024, healthcare costs are rising rapidly (Health Insurance Source).

Here’s a look at how medical costs are rising in India:

A corporate policy with ₹3-5 lakh coverage is insufficient for serious illnesses, forcing employees to dip into their savings or take loans.

Solution: Invest in an individual health insurance policy with a higher sum insured to cover medical inflation.

2. Coverage Ends When You Leave Your Job

Your corporate health insurance is valid only while you are employed. If you: Switch jobs and your new employer doesn’t offer health insurance Take a career break (freelancing, entrepreneurship, sabbatical) Lose your job or retire Your health coverage ends immediately.

According to a LinkedIn Workforce Report, the average job tenure is 4-5 years, meaning employees may face multiple gaps in insurance coverage throughout their careers.

Solution: Having an individual health insurance policy ensures continuous coverage, regardless of job changes.

3. Employers Can Change or Discontinue Coverage Anytime

Employers have complete control over corporate health insurance policies. Since health insurance is not mandatory for companies in India (Source), your employer can:

• Reduce benefits or change the terms.
• Increase co-pay requirements.
• Remove dependent coverage.
• Discontinue the policy altogether

If your company decides to cut costs, employees may suddenly lose coverage or face higher out-of-pocket expenses.

Solution: A personal health insurance plan ensures you are not dependent on your employer for healthcare coverage.

4. No Coverage After Retirement

Most corporate health insurance plans expire when you retire, leaving you uninsured at an age when you need medical care the most.

Buying health insurance after retirement is challenging due to:

• Higher premiums for senior citizens.
• Pre-existing conditions exclusions.
• Medical tests for policy approval

The best time to invest in individual health insurance is when you are young and healthy, as you get lower premiums and better coverage.

Read: Best Insurance Plans for Senior Citizens in India

5. Dependents May Not Always Be Covered

Not all corporate health insurance policies cover dependents. Even if they do, the sum insured is shared, which means:

If multiple family members are hospitalized, the coverage may get exhausted quickly
You may need to pay out-of-pocket expenses for additional medical costs

Solution: A family floater health insurance plan offers higher coverage for all family members.

6. Hidden Costs: Co-pay Clauses and Room Rent Limits

Many corporate health insurance plans include:

Co-pay clauses: You must pay a percentage of the hospital bill (e.g., 10% co-pay on a ₹2 lakh bill means you pay ₹20,000).
Room rent caps: If your policy limits room rent to ₹5,000/day, but you choose a ₹10,000/day room, you must pay the excess amount.

Solution: An individual health policy allows customization, so you can choose a plan without co-pay and room rent restrictions.

Why You Need an Individual Health Insurance Policy

Considering the limitations of corporate health insurance, investing in an individual health insurance policy is a smart move.

1. Higher Sum Insured

Choose coverage from ₹5 lakh to ₹1 crore based on your needs.

2. Lifetime Renewability

Unlike corporate policies, individual plans provide continuous coverage even after retirement.

3. Customizable Benefits

Add riders like critical illness cover, maternity benefits, and OPD cover.
Some plans also cover AYUSH treatments (Ayurveda, Yoga, Unani, Siddha, Homeopathy, Naturopathy).

4. Wider Hospital Network

Individual policies provide access to a larger hospital network, ensuring better treatment options.

5. Tax Benefits Under Section 80D

Claim deductions of up to ₹25,000 (₹50,000 for senior citizens) for premiums paid.

Final Thoughts: A Smarter Approach to Health Insurance

While corporate health insurance is a valuable employee benefit, it should not be your only safety net.

Given the rising medical costs, employment dependency, and lack of post-retirement coverage, having an individual health insurance policy is crucial for financial security.

Action Plan:

• Assess your corporate insurance coverage—is it enough?
• Invest in an individual health insurance policy as early as possible.
• Compare plans based on coverage, premiums, and additional benefits.

By taking a proactive approach, you can ensure comprehensive health coverage for yourself and your family, no matter what the future holds.