Singaporeans who rely on their employers' group insurance for coverage may find themselves at a disadvantage when policies change.
Some Singaporeans have decided that, because their company provides group insurance, there’s no need for them to have personal insurance coverage. After all, between MediShield Life and the employer’s plan, practically everything is covered - buying private insurance is hence a “waste”. But there’s a good reason why you shouldn’t rely too much on your employer’s health benefits:
How does Group Insurance Work?
Any organisation (be it a company, school, religious group, or even extended family) can buy group insurance for its members. Group insurance is often free, although some organisations may require partial payment from its members.
The main benefit of group insurance is that, because it’s a package deal, you can sometimes get coverage for things that personal insurance won’t provide. For example, if you have chronic back problems, personal insurance may not cover this as a pre-existing condition. But if you join a company’s group insurance, you may be able to make claims for it (check with the insurer in question, or the company’s Human Resource department).
If you work for a large corporation, group insurance tends to be a better deal than you could get alone. Pay outs tend to be bigger, and coverage is more extensive. It’s because large companies buy group insurance policies that amount to millions in premiums, and they have much more bargaining power than individuals.
Despite all this, there are some key reasons why employees should still buy their own insurance plans. This is because:
- Your employer can change the insurance policy
- Your employer can downgrade or remove the insurance
- You cannot easily leave the company when you’re dependent on their policy
- Retrenchment, and inevitably retirement, will remove you from the policy
Your Employer can Change the Insurance Policy
Remember, your employer owns the group insurance, not you. And most employers subject the group insurance to regular reviews.
In some companies, senior management decides whether, and how often, the group insurance policy changes. In others companies, changes to the policy may be a democratic process, with every employee contributing input.
If the group insurance policy is changed, it may not work in your favour. For example, say you’re dependent on the group insurance policy, to get regular treatment for arthritis.
Upon the next review however, the majority of employees agree to reduce coverage and payouts for such conditions, and trade it for dental care. This can result in you having to pay full cost for arthritis treatment.
This is why it's important to be protected by personal insurance policies as well: if the company’s insurance changes, you’ll at least have something to fall back on.
Your Employer can Downgrade or Remove the Insurance
During economic downturns, or “efficiency improvements” (read: cost-cutting), your employer may opt for cheaper group insurance. In extreme cases, small companies may even abandon having any form of group insurance.
If you’ve put off buying personal insurance until this point, and you’re now 40 or 50 years old, you’ll find you need to buy private policies at much higher premiums. Also, you won’t be covered for medical conditions that you’ve since developed.
To be safe, buy comprehensive medical insurance when you’re still young and healthy. It doesn’t matter how good your employer’s group insurance may seem; you don’t want to be wholly dependent on it.
You Cannot Easily Leave the Company When You’re Dependent on Their Policy
Companies don’t provide group insurance for purely altruistic reasons. One reason why they like it is that it indirectly “bonds” workers.
For example, say you’re diabetic, and you’re wholly dependent on your company's insurance to pay for treatment. Later on, you receive career opportunities elsewhere, or want to leave and set up your own business. You might find that such a move is unaffordable, on the basis of your medical needs: once you leave the company, the insurance policy no longer covers you.
If you have private insurance, you won’t be shackled to a single employer in this manner.
Retrenchment or Retirement Will Remove You from the Policy
You can’t work forever. At some point, be it through retrenchment or retirement, you’re going to have to leave the company. By that point, it’s a little late to buy private insurance - your premiums will be sky high on the basis of your age, and you may have developed chronic medical conditions.
Preempt your eventual retirement, and make sure you’re fully covered by your own insurance policy.