Health Insurance: Why Your Company Cover Isn't Enough

Ankit works at a tech company in Hyderabad. Good salary, ₹5 lakh health insurance from the company. He’s 28, fit, never been to a hospital. Health insurance is the last thing on his mind. Then his father calls from Lucknow. Chest pain, rushed to hospital. Diagnosis: two blocked arteries. The doctor recommends angioplasty with stents. Estimated cost: ₹6-7 lakh. Ankit calls HR. Company insurance doesn’t cover parents. Only him, his spouse, and children. He doesn’t have ₹6-7 lakh lying around. He drains his savings, borrows ₹1.5 lakh from a colleague, and puts ₹50,000 on his credit card. His father recovers in two weeks. Ankit spends the next year recovering financially.

One hospital visit. No insurance for his father. Savings wiped out.

I was one of those people. In 2006, I joined my second company in July. A few months in, we had to select our health insurance options. The company offered a base policy, but you could opt for higher hospitalization coverage (HIS) at an additional premium of around ₹3,000-7,000. I thought: why should I pay extra? I skipped it. Three or four months later, my father needed open heart surgery. It cost around ₹5 lakh. The base cover wasn’t nearly enough. Luckily, my company still allowed new joinees to upgrade their coverage even after the initial window, and I managed to get the HIS just in time. The surgery was covered. The only out-of-pocket expense was my flight to Delhi, where my father got operated at Max, Saket. That flexibility didn’t last. A few years later, the same company changed the policy: you select when you join, or you lose the option. I got lucky with the timing. Most people won’t.

The emergency fund we talked about in the previous article protects you when your income stops. But a single hospitalization can cost ₹5-15 lakh. No emergency fund is meant to handle that. That’s what health insurance is for.

Why company health insurance isn’t enough

Your company policy probably covers you, your spouse, and your kids. That’s a start. But here’s what most people don’t realize:

1. It may not adequately cover your parents. Some company policies cover parents, usually as an opt-in at an additional premium. But the cover is often limited, ₹2-5 lakh, with sub-limits and co-pay. And like everything else in your company policy, it ends when you leave. If your parents don’t have their own policy, one hospitalization can drain your savings.

2. It’s tied to your job.

• Switch jobs? Suppose you take a couple of weeks off before joining the next company, maybe to travel or just take a break. During that gap, you have no cover.
• Get laid off? Remember Rahul from the last article? Cover ends the day you leave.
• Retire? You’re on your own at 60, at an age when you need insurance the most and premiums are the highest.

You’re one accident away from a massive bill during any of these gaps.

3. Serious illness can exhaust company insurance limit. Company policies typically offer ₹3-5 lakh cover. That sounds like a lot until you need cancer treatment, an organ transplant, or a major accident. A few weeks in the ICU alone can cross ₹5 lakh. Once you exhaust the company limit, every rupee after that comes from your pocket.

4. Sub-limits reduce what you actually get. A “₹5 lakh” policy doesn’t always pay ₹5 lakh. Many company policies have:

• Room rent caps: Policy pays ₹4,000/day, hospital charges ₹8,000. You pay the difference. Worse, it proportionally reduces other parts of the claim too.
• Disease-specific limits: Certain surgeries capped at lower amounts.
• Co-pay: You pay 10-20% of every claim yourself.

What should you buy?

Buy your own health insurance policy. Keep the company cover as a bonus, but don’t depend on it.

For yourself and your family

Buy a family floater plan. This covers you, your spouse, and your children under one policy with a shared sum insured. For example, a ₹10 lakh family floater means any family member can use it, and the total coverage across all members is ₹10 lakh in a year.

How much cover do you need?

For your parents

Buy a separate policy for your parents. Don’t add them to your family floater:

• Their age pushes up the premium for everyone
• Their claims reduce the cover available for your family
• Separate policy means separate sum insured

If your parents are above 50-55, premiums will be higher and there will be a waiting period for pre-existing diseases (up to 3 years as per current IRDAI rules). This means if your father already has diabetes, the insurer won’t cover diabetes-related hospitalizations for the first 3 years.

This is exactly why you should buy early. The longer you wait, the more expensive it gets and the more exclusions apply.

How much does it cost?

Premiums depend on your age, city, and cover amount. A rough guide for a ₹10 lakh policy:

That’s roughly ₹800-₹1,500 per month for yourself. Less than a couple of dinners out. For the protection it gives, this is the best money you’ll ever spend.

Tax benefit under Section 80D: Premiums up to ₹25,000 for yourself and family are tax deductible. For parents above 60, the limit is ₹50,000. If you’re in the old tax regime, this effectively reduces what you pay.

Choosing the right policy, understanding super top-ups, cashless vs. reimbursement, and what the fine print actually means: we’ll cover all of that in a detailed guide.

Common mistakes

The bottom line

Once this is done, there’s one more layer of protection to consider: making sure your family is financially secure if something happens to you. We’ll cover term insurance next.