The purpose of insurance is to transfer to an insurer the policyholder’s risk of suffering a monetary loss should an unpredictable event happen. If there is a 1 percent chance that you will have an unexpected treatment during the year, and it will cost Rs.5 lakhs, then the expected loss is equal to 1 percent of Rs.5,000 per year. Insurance companies help the individual spread this risk over hundreds of thousands of people.
Adverse selection is defined as an increase in the chance for a person/organization to take an insurance because they believe their immediate health risk is higher than what they would pay as insurance premium.
Imagine an incidence where a person doesn’t have a health insurance policy and is diagnosed with a disease. The doctor suggests him/her to go for a surgery which is quite expensive. Looking at the problematic situation, he/she would choose to buy a health insurance policy without disclosing the disease and get the treatment covered under insurance.
To avoid this problem of adverse selection, retail insurance products add four types of waiting periods. A waiting period is the amount of time an insured must wait before some or all of their coverage comes into effect.
If the person gets hospitalized in the first 30–90 days from the start of the policy, he/she won’t receive any claim benefit from their health insurance policy if they fall sick or get hospitalized.
There is a specific waiting period varying between one year and three years for particular ailments like a tumour, ENT disorder, hernia, cataract, piles and sinusitis.
Pre-existing disease means any condition, ailment or injury or illness or related condition(s) for which insured had developed signs or symptoms, and/or were diagnosed and/or received medical advice/treatment, within 48 months prior to the first policy with the company. Most insurance products either do not cover pre-existing diseases. If they do cover, they add a waiting period that usually ranges from 2 years to 4 years of continuous policy coverage.
Some health insurance products provide maternity benefits. However, these benefits also come with a waiting period varying from 9 months to 36 months.
A group health insurance is a health insurance plan that covers a group of people who work in the same organization. A group health insurance plan can additionally cover the family members of the employees, including spouse children and parents.
Three biggest advantages of group health insurance are:
The reason insurance companies provide above benefits for group cover is that it assumes that the group will have no selection in terms of who is getting covered in the policy. Hence the insurance companies have strict requirements that needs to be met.
As an organization, you have three policy design options:
Here are some common requirements.
The last requirement that your organization has a minimum of 100 members has been a roadblock for many SMEs and startups to provide group health insurance to their team.
With Plum, we have reduced that limit to 7 members. You can now get all the benefits of group health insurance even if you are a company of 4 employees and have 3 dependents (i.e. total 7 members).
Additionally, we have made sure that even a small startup with as few as 7 members can get advantage of volume pricing without any negotiations. We provide startups with pre-negotiated and transparent prices.
If you are an organization that hasn’t set up a health cover yet for your employees, this is a good time for you to start taking care of the health of your team, and give your team peace of mind.
To get started, just visit www.plumhq.com and get started. All you’d have to do is share your details and what kind of cover you’re looking at and our instant premium calculator will give you an estimate within 2 minutes. Try it now at https://app.plumhq.com/estimate.