Employer employee Insurance: What THE HELL it is…?

Employer employee insuranceWhat is Employer employee Insurance…?

Today,

There is no dearth of good options in India…?

If you are hunting for a better job, then most likely somebody would be looking for you already…

We are a developing country and we are developing really fast…

Thus,

To keep growing we switch for better jobs. The search for good opportunities always keeps the employee’s turnover rate high.

To keep this ratio down employers often comes out with lucrative options. And one such option is “Employer sponsored Insurance” to which we call “Employer employee Insurance”.

What is Employer employee insurance…?

It’s a policy where the employer buys insurance for their employees. Here the premiums are often paid by the company and nothing is charged from employees. This way they become the beneficiaries of something they never pay for.

The biggest benefit of the company sponsoring employer employee insurance is to keep the employees turnover under control.

If you get something out from your salary then why would you not want to stick to it…?

The same way,

If you feel financially protected for your family then why would you not stick with that company for long…?

Employer sponsored insurance is an assurance to employees that if anything happens then their families will be taken care off.

Now this brings me to a question,

Is company sponsored policy enough to financially protect your family…?

Well it “May be” or “May be not…!”

This is something that totally depends on your needs.

Generally,

Employer employee insurance doesn’t always cover your needs. They are only meant to provide coverage that hardly meets your salary.

Thus,

Relying solely on your employer sponsored plan may not be a good idea…!

Problems you may face if you only go by employer sponsored insurance…

1. Your employer insurance may not always be with you…

Insurance sponsored by one company may not be sponsored by other. Thus, before leaving your job always make sure whether you will be able to transfer your insurance or not.

With most companies it may not be possible and when it is then it can be really expensive.

How…?

Employer sponsored plans are limited to a handful of insurance providers. When these providers are not cost efficient with your new employer then your plan may turn out to be costlier.

This would mean you will either have higher premium payouts or lower coverage.

Under most scenarios, your new employer may not contribute 100% towards your premium. He may bear the burden partially and may ask you to pay the other half. And this way your new job may not come out to be financially appreciating as it was supposed to.

2. It can be tricky:

Are you leaving your job because of worsening health…?

If yes,

Then you are not only losing your job but also forgiving your insurance plan.

How…?

When you buy group insurance under company sponsored scheme then you are not required to give any medical test. This can be advantageous as you won’t shell out a single penny extra because of your previous ill health. This would mean that at the time of claim there won’t be a single question asked and you will be paid.

But,

When you leave your job on account of your bad health then:

  1. First you lose your monthly salary and
  2. You lose your life-cover that your family needed the most.

Thus at the time of urgency you may feel like hand-cuffed to your company to keep your life-cover.

3. Your plan may not be enough to support your family…!

Insurance offered by your insurer is not meant to fulfill your financial obligations. It is only enough to provide coverage to your salary. If you have home or car loan to pay then forget that it will be paid by your insurer.

That’s why,

It is often recommended that you have 10 to 12 times of your annualized salary as insurance. If you are not getting this much cover then you must consider buying more.

4. It may not be as cheap as you think:

Though you get the insurance policy for free, but is it the best policy you are offered…?

Well it depends…!

Normally,

When the employer bears the burden of premium then most likely he checks out the cheapest option.

What is inexpensive to him as a group plan may be costly to you as an individual. Because the life-cover you get may not worth the premium.

Thus,

It is always good if you can hunt for the more suitable options. Comparing apples to apples will not only help you know the actual scenario but will help you plan your future accordingly.

The matter of the fact is,

You can’t entirely depend on employer employee insurance.

If you are saving for your sister’s marriage or your kid’s education then its time you buy a third party insurance…

Now,

What is third party insurance…?

It’s a policy that you buy out of your own pocket, meaning you pay the premium yourself to stay insured.

Now you may ask,

Is it legal to buy two insurance policy of the same kind…?

Fortunately yes,

If you feel like that your company sponsored plan isn’t enough to protect your family’s interest then you can buy third party insurance.

What this means to you…?

This can be better explained with an e.g.

If you have your employer covered under group insurance with:

  • Sum assured: Rs.50 lac,
  • Premium of Rs.4000/-

And,

If you have even bought a third party insurance with:

  • Sum assured: Rs.1 cr.
  • Premium of Rs.7,900/-

Then,

At the time of need, your family will receive Rs.1.50 cr. (i.e. Rs.50 lac from company’s insurance and Rs.1cr. from third party insurance).

Employer employee insurance is beneficial as you get that for the minimal cost but it turns out to be the best if it is supplemented by third party plan.

Consider buying it as you will only strengthen your family financial future.