Planning To Resign? Don’t Lose Benefits Of Group Health Insurance Policy—Here’s What You Can do

Many firms include group life insurance as part of their employee benefit packages, with or without any extra cost. Group insurance, typically, offers similar insurance coverage and benefits to all group members, irrespective of their work experience, role, age, gender, and other factors. Some group policies also cover the family members of employees. 

Medical benefits may include hospitalisation expenses, maternity coverage, ambulance coverage and more, subject to the sub-limits laid in the policy. But what happens to your group life insurance policy when you leave your job?

It is normally assumed that the insurance coverage ceases along with the job. But a lot of insurers that offer group coverage give the option of converting the group coverage to an individual policy when the employee moves out of the job.

An employee should check the health plans that the insurer offers and compare them based on their inclusions, exclusions, and terms and conditions. They must also consider the coverage amount and get a rough estimate of the policy premium.

Benefits Of Converting Group to Individual

As per the rules set by the Insurance Regulatory Development and Authority of India (IRDAI), you can switch from a group plan to health insurance for individuals with the same insurer. The premium rates will likely be higher than your group insurance premium paid by the employer.

When porting, the waiting period of your employer’s health insurance also gets ported to your individual health cover. Waiting period is the time you need to wait before getting the insurance benefits on pre-existing medical conditions; some insurers and policies also have a blanket waiting period in the initial months. Typically group insurance plans have no waiting period.

You can enjoy full benefits of your individual health insurance cover from day one of converting a group policy to an individual one. IRDAI has laid down that your new insurer “shall allow for credit gained by the insured for pre-existing condition(s) in terms of waiting period”.

Further, group health insurance cannot be tailored to a specific insured person; it may not always meet their requirements. For example, you may want vaccination coverage in your policy for your children, but your group policy does not provide it. In such cases, an individual health insurance policy tailored to your family's health needs is better. Other advantages, such as no-claim bonus and critical illness coverage may also not be available with group health insurance.

What Should You Do? 

You must inform your insurer at least 45 days before your resignation. If you forget to inform the insurer, you get a five-day window after your last working day to inform the insurer about decision to migrate.

However, the insurer can assess the new risks before choosing whether to allow migration to individual health insurance. As per IRDAI, migration from a group health insurance policy to an individual health insurance policy will be subject to underwriting. Generally, proposal form, portability form, copy of the resignation or retirement letter, stating the last date of employment duly signed and stamped are required.

“Where underwriting is done, the insurance company has to inform its decision to the insured within 15 days of receiving the request,” IRDAI had said in a notification issued earlier.

If you had submitted your choice of policy, the insurance company will inform if you are eligible for your choice within 15 days. The policy is activated once you pay the premium for the plan. After the migration to the new policy is successful you can also consider porting to a similar health policy by different insurer.