Financial vaccination

Why You Need An Individual Health Policy Over Your Employer Health Coverage

Oct 08 2021


There are many benefits to group health coverage provided by your employer. But certain circumstances may require you to purchase your own health insurance plan. In our fifth podcast of the Financial Vaccination series, Mrin Agarwal, financial educator, licensed financial advisor and founder of Finsafe, highlights the need for having individual health coverage in addition to your employer group plan.


A lot has changed in the lives of Indians in the past year. The COVID-19 pandemic revealed the importance of one's health and well-being of millions as the highest priority. With growing hospitalisation and treatment costs, can you still afford to stay comfortable with your employer's group coverage? 

Mrin Agarwal, financial educator, licensed financial advisor and founder of Finsafe with a rich experience of more than 20 years in wealth management, expresses the need for having an individual health plan in a completely transformed healthcare landscape.

Understanding Employer Health Insurance Coverage

Group health insurance is a cover provided by the employer. Insurance providers typically offer companies group policies at a very nominal premium. This way, an employer can afford to take one large cover for all its employees. 

Group health insurance coverage ranges between ₹2 lakhs - ₹5 lakhs. This coverage is valid as long as the employee is part of the organisation.

How Group Health Insurance Differs from Individual Health Insurance

Individual health insurance: This coverage is purchased by a single individual either for themselves or their family based on their employment status, medical history, financial standing and age. 

Group health insurance: This form of employee coverage is explicitly designed by organisations to be purchased for their employees. A group health insurance plan is provided based on an employer's financial strength and is valid for an employee only until his/her employment.

Let's look at the major differences between the two.

Areas of Difference

Group Health Plans

Individual Health Plan

What it means

Covers a group of people under one plan

Offers coverage only to the policyholder

Insured parties

The employee and related family members

Only one individual that is the policyholder


The employer


Control over the plan

Only the employer or the purchaser has control over the coverage and add-ons

Complete control in the hands of the policyholder on coverage and add-ons

Add-on options


Freedom to purchase any number of available add-ons

Claims process

Third-party administrator assists in claims.

Claims can be made directly with the insurance provider

Sum insured

Low, compared to individual health insurance

Option to choose a higher some insured compared to group health plans

Eligibility criteria

Must be a salaried/permanent employee of the company

Must be at least 18 years of age

Tax benefits



Coverage for pre-existing conditions

Typically, from the first day of coverage

After completing the waiting period

No claim bonus

Not available


Critical illness coverage


Covered, if chosen by the policyholder


Why Group Insurance Coverage is Not Enough

A group health cover may offer just the basic and minimal sum coverage. Besides, these plans may not cover many illnesses otherwise covered under an individual health insurance plan or a family floater policy.

This brings us to the need for having an individual health plan.

Need For Individual Cover in Addition to Group Insurance Coverage

It is critical to have an individual health cover in addition to group coverage. The reasons for these are:

  1. If the employee decides to leave the organisation, the coverage also ends.
  2. As a person ages, coverages get more expensive, and premiums become costly. Hence, the earlier one purchases an individual health cover, in addition to group health coverage, the more affordable it can be in the long run.
  3. Employers can only cover up to a specific amount in a group health coverage policy. So, medical treatment or hospitalisation costs may become unaffordable if critical illnesses, such as kidney failure, cancer, or heart issues need to be addressed. 


What You Need to Know When Purchasing an Individual Health Plan?

When buying an individual health plan, a necessary factor is to have the right amount of sum insured. 

For example, a person in his mid-30s, taking care of a family of four, needs to have health coverage of at least ₹15 - ₹20 lakhs to meet any form of treatment or hospitalisation costs of major illnesses.

One way to upgrade your employer health plan is to purchase a super top-up health plan if the sum insured is insufficient. That means a super top-up plan can enhance your coverage amount without having to pay the cost for a standard health plan.

Cost-Effective Option: Super Top Up Health Insurance 

A super top-up health plan is regarded as a cost-effective option to insure a policyholder for any medical uncertainties. This health plan helps a policyholder to increase his coverage/sum assured to a substantial figure at a low cost. 

However, it is vital to remember that it comes with a deductible. Whenever there is a claim made, the insured individual or the policyholder must pay the amount. The insurance company will pay the balance based on their evaluation of the claim.

The Many Benefits of a Super Top Up Plan

One of the chief benefits of taking a super top-up plan is that the policyholder is only required to pay the deductible just once up to that particular limit.

For example, let's assume that Mr. A has a super top-up health policy of ₹20 lakhs, where he needs to pay a deductible of ₹3 lakhs. Now, in this super top-up plan, Mr. A can make multiple claims during the policy term, but he needs to pay a total of only ₹3 lakhs. 

So, for instance, if Mr. A claims ₹5 lakhs, the first ₹3 lakhs must be paid by him, and the balance will be paid for by the insurance company. 

But now, let's assume that he claims ₹10 lakhs. In this case, Mr. A does not need to pay anything since he already paid the deductible of ₹3 lakhs. This shows that he needs to pay only a one-time amount of the entire deductible.

Besides, a super top-up plan also provides a good deal of flexibility on the amount of deductible that the individual wishes to choose based on the sum assured. 

For example, a super top-up plan of ₹20 lakhs may offer ₹1/₹3/₹5 lakhs as deductible, depending on the policyholder's choice. One point to keep in mind is that the higher the deductible, the lower the premium.

Besides, the amount paid towards premium on a super top-up plan gives you tax benefits under Section 80B. A super top-up plan can also be purchased online, making it convenient and easy to access. 

Let's look at the combination of features and benefits of buying a super top-up health plan.

  • Covers treatment for COVID-9 pandemic
  • Need to pay deductibles only once
  • The flexibility of choosing any limit of deductibles depending on your sum insured and existing plan.
  • Greater sum insured over and above your corporate plan and at a low premium
  • Extensive coverage benefits not provided by your corporate policy.
  • Better coverage for senior citizens and parents.
  • Additional tax-saving benefits on premium paid.
  • Availability of cashless treatment within your insurance company's network of hospitals.
  • It can be purchased online quickly and without hassles.



Knowing the differences between individual health insurance and group health insurance can help you find the right individual plan that best meets your needs. While group health insurance plans are cost-effective for your organisation, it only works as long as you are employed with your current employer. As time passes, you may find it challenging to purchase an individual health cover, especially when meeting your post-retirement health issues. 

Having an individual health insurance cover, even if your employer covers you, can be a smart decision to safeguard your health. You have the power of choosing the ideal insurance company and peace of mind knowing that you still have coverage even when you are no longer employed.