A motor insurance policy for employees or an option to cover only parents and children in base cover can go a long way in bringing affordable care to employees. And since employers are bulk buyers, premium costs will be lower.
It is standard practice for companies to offer group health, personal accident and term insurance to employees. Company bears the cost and all eligible employees are covered from the day of joining. This insurance is spelled out in the offer letter and is sometimes calculated as a part of the total compensation. While all is well, employers need to do more.
Employees need to think deeply about the risks they face and how they can mitigate those risks. Before company heads panic about the cost involved, let me assure them that it doesn’t have to be a cost to the company yet can be a material financial savings for the employees.
Also read: How to optimize premiums for private health insurance when an employer-sponsored plan exists
A one-size-fits-all approach doesn’t always work
Staff risk and insurance requirements are very different and companies cannot follow a one-size-fits-all approach. Some employees have dependent parents. Some have spouses with adequate insurance cover. Some are married with children, others are married but childless or single. Some use their own car and some use public transport. The way to address these diverse needs is to offer a bouquet of optional covers that employees select based on their specific needs and pay for, perhaps through payroll.
A company is well-suited to procure insurance for employees because it can buy in bulk and leverage its existing broker or insurer relationships to purchase cost-effectively. In most cases, individuals will never be able to buy insurance that companies can buy.
There are three types of voluntary insurance for companies to consider: (a) Group health insurance for parents and extended family, (b) Enhancement of core group health insurance (c) Other insurances, such as motor, personal accident and OPD cover.
Group health insurance for parents is the most sought after for good reason. Seniors struggle to buy individual insurance because of chronic illnesses. As a result, premium loading and reduction rates are higher for senior citizen health insurance. Also, many seniors find it difficult to coordinate required medical exams. Once insurance is purchased, claim rejection rates due to pre-existing conditions are relatively high. Group insurance that companies buy for parents solves these problems Medical exams are waived and pre-existing conditions are covered immediately.
Also Read: How Much Health Insurance Do You Need?
Insurance for parents
Several companies are willing to provide parental insurance for employees on a voluntary basis. Employees are mostly expected to pay for their parents’ insurance, perhaps with some limited subsidy by the employer. A good parental cover can cost around Rs 25,000 per year. It can be similar in price to private insurance but much more effective and affordable.
You must work with experienced brokers to buy parental cover. There are few insurers who will provide parental insurance because the claims are high. Employees whose parents are not in good health are more likely to purchase these covers. This results in anti-elections. A good mediator resolves anti-selection by ensuring high enrollment. The intermediary will clearly communicate the value proposition to the workers.
The second type of voluntary cover is the flexibility to extend employer-provided core group health insurance. This extension may be in the sum assured or may cover the immediate family in addition to just the employee. This concept has not been sufficiently explored. Most companies fix benefits for employees and leave no room for customization. They should allow changes to the original cover and charge the employees for such changes.
For example, if a company has a standard cover of Rs 3 lakh, it can increase it up to Rs 5 lakh to pay additional charges to employees. Or, if only one employee is insured they can consider adding a spouse and children at one cost.
Also read: Why the claims experience differs between individual and group health plans
Not just health, but also your car and home
Finally, most workers need more insurance than just health cover. They will buy this insurance individually and may not get the best deal or get the best insurance. A good employer can address this by offering a curated bouquet of insurance for employees at excellent terms.
Consider motor insurance. Employers can pre-negotiate the best discounts and give employees access to a portal where they can easily renew motor insurance, at better terms than they would get individually.
Employers can also set up group retail products for employees. Examples include personal accident, hospital cash and OPD insurance. In personal accident insurance, the company can negotiate a cover of Rs 15 lakh for Rs 500 where the employee pays three times his own premium. New age insurance, such as cyber liability cover, can be sold on such platforms.
Voluntary benefits do not always have to be insurance based. A good company will encourage employees to have annual health check-ups. Here are the price advantage elements. A complete diagnostic panel that costs Rs 5,000 in a large hospital can be done for Rs 1,500 if negotiated by the company. With such a price difference, workers willing to test will increase.
Companies need to take a comprehensive look at employee risks and their insurance requirements. Certain covers such as employee health and term insurance are essential. But then employees should also have the flexibility to fine tune their base insurance and cover other dependents. Good companies will then use their product knowledge and negotiating power to help employees purchase other insurance and medical services. This will not cost the company but will result in significant employee benefits and an unmatched employee proposition. And undoubtedly leads to better employee retention and loyalty.
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