Understanding individual policy and corporate policy in health insurance: Key differences and benefits

Most people are confused about the difference between individual policy and corporate policy in health insurance. For them at the end of the day it’s just insurance, so why are there two different jargon for the same product? To some extent, they are right in thinking this way. The difference between the two manifests in how these policies are purchased and what purpose they serve.

So let me put down some quick pointers for you to crack the difference:

• Individual policy is what you buy from an insurance company directly. Plans are available on their website. Corporate policy is what you get covered in when you join an employer.

• In individual policy, you have the flexibility to buy the plan of your choice and the sum insured as per your own risk assessment. Corporate policy isn’t that flexible. You get covered in a standard plan provided by your employer.

• Individual policies have a waiting period of 2–4 years for specific ailments, i.e. you can’t claim for those illnesses for the first few years of buying an individual policy. But when it comes to corporate policies, mostly the waiting period is waived off. You become eligible to claim right from the date of your joining.

• Individual policies have lifetime renewal, i.e. you can continue to renew your policy for as long as you wish. But corporate policy is only available to you as long as you are employed with your company or till the time your employer keeps the policy.

• Corporate policy may limit the number of family members/dependents you can add to the policy, whereas in individual policy you are free to have whichever dependent you wish to add to the policy.

• Individual policies can be ported easily. Corporate policies do not make for easy porting.

• Individual plans are standard plans, so some of their benefits may be restrictive. Corporate policies are negotiated by each employer, so they can be very rich in benefits. It depends a lot on the employer.

• Individual policies offer benefits such as free annual health checks, no claim bonus, restoration benefit, etc. Corporate policies do not offer these advantages.

Naturally, the next question will emerge in your mind – which one is better for me? Well, strictly speaking, you don’t get to choose your corporate policy. It is what you get from your employer. But it is good to have due to the waiver on the waiting period. Having said that, it is important to complement your corporate policy with your own individual policy. When you are in-between jobs, when your company is downsizing and you run the risk of getting axed, when you would be retiring from your job, and when your corporate policy’s sum insured would be smaller compared to your actual hospital bill, your individual policy will give you the cushion.

So it makes sense to have an individual policy even when you have coverage under the corporate policy from your employer.