How are Group and Personal Health Insurance Different? Pros and Cons

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How are Group and Personal Health Insurance Different? Pros and Cons

With a wide range of customised health insurance plans available these days, choosing the best cover for medical exigencies has become highly convenient. Once you chalk out your insurance needs, you will be in a better position to look for the right type of policy. However, for this, you first need to understand what are the types of health insurance. Based on the usage of the health insurance plans, we can divide them into two categories - Group health policies and Personal or Individual health policies.

While the names may be deceiving, it is important to understand the concept of group vs personal insurance, so that you can either choose the one that best suits you, or opt for both if need be. 

Simply put, a group health insurance plan, also called corporate health insurance, is an incentive that your employer provides you. It may or may not offer coverage to your dependent family members. An individual insurance policy, on the other hand, is the health insurance that you buy yourself for your personal use.. What is common between them is they both provide coverage for emergency hospitalisation expenses.

If you are wondering how does group insurance differ from individual insurance, then you need to know that there are quite a few differences that must be clearly understood. This is necessary in order to make the right decision to ensure a financially secure future for your family. Read on as we compare group health insurance policy with a personal health insurance policy. However, before jumping into that let’s consider to understand what Group and Individual Health Insurance mean broadly. 

What is a Group Health Insurance Policy?

Group health policy is provided as part of the employees’ benefits by an organisation or an association. The coverage and premium are decided on the basis of the cumulative risks of all the individuals in the group. The coverage is uniform and will be available to the members so long as they are a part of the group. In some cases, the coverage of the group health policy covers the individual’s spouse, children and/ or parents. However, the coverage may differ from company to company. 

When you compare group health benefits, you will see that the policy is beneficial for the employer as well as the employee. By creating a protective environment, the employees give the employer one less thing to worry about. Apart from this, the employer can also seek tax benefits on the premium that is paid. 

What is Personal Health Policy?

It is a kind of health insurance policy that an individual buys for himself/herself and his/her family. The policy coverage is usually customised to suit the specific requirements of the individual while the premium is decided on the basis of factors such as the individual’s age, family medical history, lifestyle and type of coverage selected. The policy remains valid until the time the insured person wants.

When you look at group VS personal insurance, it is clear that individual insurance is expensive. This is because group plans are bought in bulk. Individual plans are for personal use and, thus, offer more options for customisation. 

Differences Between Group and Personal Health Plans

To further understand how does group insurance differ from individual insurance, let us discuss the basic differences between group and personal health insurance, below.

Coverage

The first thing to consider when you compare group coverage health insurance to personal insurance is the coverage. Typically, group plans offer comparatively less protection. As they are bought in bulk and have to be affordable, the insurance companies offer only basic coverage. The sum insured is generally between ₹2 lakhs to ₹5 lakhs. Personal plans, on the other hand, are highly flexible. You can opt for higher coverage, as much as ₹1 crore, as per your and your family’s needs. 

Tip: If you do not have any specific requirements for health coverage, this plan is the best as it offers coverage for emergency medical or hospitalisation expenses. However, even if you have a medical history of a specific illness, you would still be considered for coverage under this plan, whereas your request could get rejected if you opt for an individual health plan.

Affordability

Group health plans are much more affordable than individual health insurance plans as the cost is paid wholly or partially by the employer. This plan is highly preferred by employers as employers can earn tax benefits. 

Tip: If you are not very satisfied with your group health plan and are looking for more coverage specifically for some illnesses, then opting for an individual plan over and above the group plan is a smart idea to enhance the coverage, without increasing your expenses too much. 

Plan Options

In group health insurance, the employees don’t have much say in deciding the coverage, policy inclusion or exclusion and the supreme authority lies at employer’s side. But, in personal health insurance, you have the flexibility to choose a plan that best suits your insurance needs. 

Pre-Existing Ailments

As far as the advantages of such plans are concerned, health coverage for pre-existing conditions is the biggest plus point of group health plans.

Additional Perks

Unlike group plans, personal health plans offer several additional benefits, such as no claim bonus, value-added services. That is, policyholders become eligible for discounts or increased sum insured upon policy renewal. When compared to group plans that are applicable only as long as you are with the employer, individual health plans are valid until the policy is terminated by the policyholder.

The table below will help compare group health individual plans with individual/ personal health plans at a glance:

Factors to Consider Group Health Plans Personal Health Plans
Policy Duration The coverage is controlled by the provider and can be cancelled if the member is no longer a part of the group or organisation. It is up to the policyholder to continue the plan or not.
Coverage Uniform coverage is offered to all the individuals in the group. In most cases, the group plan offers coverage to the employers’ dependents, like spouses and children. The policy coverage can be customised by the policyholder. To get coverage for dependents, the policyholder will have to pay a higher premium.
Pre-Existing Illnesses Most group plans cover pre-existing illnesses from Day 1 You might have to serve a waiting period of 24 to 48 months to get coverage for pre-existing illnesses.
Premium Typically, the employee pays the premium, either the whole amount or a part of it. In case the employer has to pay the premium, the amount is deducted from the employee's salary directly. The premium amount is paid by the individual on a regular basis.
Medical Check-ups For a specified coverage, there is no need for prior medical check-ups. Medical check-ups are mandatory requirements for buying some personal health plans.
Waiting period In most group health insurance plans, there are no waiting periods. Insured people are covered from Day 1. The waiting period is mandatory to serve. It may range from 30 days to 4 years (in case of pre-existing illness).
Duration With group plans, your coverage depends on the employer. Change in company policy can bring the policy to an end. Also, if you leave the job, you would have to let go of the coverage as well. A personal health insurance plan comes with a set tenure, which is typically one year, but it can be a multi-year policy too. The insured has the option to renew the policy whenever he/ she wishes.

What to Choose Between Group and Individual Health Insurance?

A better understanding of the two types of policies will allow you to compare group health employee benefits with those of a personal/ individual health plan. While both plans offer suitable coverage, when you compare group health individual plans with personal plans, you will see that the coverage is quite limited. Because group plans are ordered in bulk, the coverage is quite generic.

Keeping in mind the high medical inflation and increased prices of healthcare services in the country, relying on group health insurance might not be a very good idea, especially if you have dependents. Also, keep in mind that group insurance is not forever. When you quit your job, you’ll be without medical coverage. When you compare group health insurance plans for small businesses, you will realise that the coverage is not enough.

Therefore, if you have group coverage, investing in a personal health insurance plan, over and above it, is a better option. This way, you can ensure that you, as well as your loved ones, are protected with adequate coverage. It is suggested that you compare group coverage health insurance and personal health insurance. This will help you make an informed decision. Having said that, you can consider buying Care Health Insurance for availing comprehensive coverage. The plans offered by us are highly customisable as per the needs of your loved ones.

So, choose the best for you and your family and secure the future!

Also Know : how do health insurance plan work?

Disclaimers

The above information is for reference purposes only: Policy Assurance and Claims at the underwriter's discretion.

All plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.

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