What portion of your salary should you spend on loan EMIs?
Most people buy a house or a car by taking a loan from the bank, but do you know what is the maximum portion of your salary that you should spend on EMI? What is the 40 percent EMI rule? What are the disadvantages of spending more on EMIs? Among home loan, personal loan, auto loan and credit card bills, which loan should you eliminate first?
If you are a salaried employee, chances are your employer will have provided you health insurance. The employer takes a group insurance policy from an insurance company to provide health coverage to a group of its employees. Some companies offer it for employee’s family members too. While there are benefits of being part of a group insurance policy, one must have an individual health insurance policy also.
If you are leaving the job or for some other reason cannot continue with the group insurance, you may convert your group insurance policy into an individual one.
“According to IRDAI, an individual may opt for the conversion from a group policy to individual by completing certain requirements mandated by the insurance company which includes selection of a suitable plan, filing the required documents along with submission on time and payment of premium,” says Naval Goel, founder and CEO, PolicyX.com.
However, you cannot approach just any insurance company. It can only be the insurer which has provided the group insurance cover to the employer. If you wish to switch to another insurer, you can port the policy after completing one-year policy period.
Also note, not all individuals will be eligible for it. The conversion entirely depends on the discretion of the insurance company. “There are no specific guidelines for the eligibility criteria, but the transformation of the plan totally depends on the underwriting norms of the insurance company and their evaluation on an individual basis,” says Goel.
So far as premium is concerned, you will have to shell out higher premium compared to what you pay in the group insurance policy.
“The premium can go higher in individual plan compared to the premium in group insurance plan, which is quite affordable as the coverage is shared among the entire group,” explains Goel.
Another challenge is the medical check-up as a few insurance companies have the provision for undergoing the fresh medical check-up at the time of switching the plan, Goel adds.
While group insurance policies generally offer health cover without waiting period, if there is a waiting period for pre-existing disease in specific cases, it will be carried forward to the individual policy while conversion. So, the waiting period served will not get wasted if switching from a group plan to an individual plan.
If you have decided to switch the plan, you need to inform the insurer at least 45 days before the expiry date of the existing group policy.