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Difference Between Group and Individual Health insurance

  • Rudri Rawell
  • Jan 22 2022
  • 6 minutes
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India is seeing a sudden spike in medical expenses, especially since the onset of the Covid-19 pandemic. With this, people are now starting to realize how important a health cover could be. Health insurance policies come in different shapes and sizes but the main aim of all these is to provide basic financial cover to the policyholder. With a health cover, one doesn’t have to worry about hospitalization expenses or additional medical costs post-hospitalization. 

Health insurance plans primarily come in two different variants, individual and group health insurance plans. It is important to know the difference between these two to identify the type of insurance cover one may need. Here, we have covered the basic meaning of these two health covers and explained the main differentiating points to better understand them.

What is individual health insurance?

An individual health insurance plan provides cover to an individual for high medical expenses and related hospitalization fees. One can buy a health cover for self, spouse, children, or even parents. The premium rate is determined as per the policyholder’s age, gender, medical history, and other factors. Usually, the premium paid towards individual health insurance is expensive. However, these offer a more comprehensive cover targeted towards the insured individual’s personal needs. There are also add-ons that can be availed for enhancing the health cover. 

What is group health insurance?

Group health insurance plans are meant for a group of people who would like to get insured. These are often used in the corporate world as employers purchase these plans for their employees. However, these can also be bought by social groups, sports teams, joint families, etc. The premium for these plans is calculated as per the size of the group, the organization’s industry, demographics of the group, and other factors. A group health insurance often helps to reduce the premium rates. However, some of the benefits that can otherwise be availed in an individual health plan may not be available in group plans.

What is the Difference Between Group and Individual Health insurance

Here are some of the differentiating points between individual and group health insurance plans:

Parameter Group Health Insurance Individual Health Insurance
Who is insured? Group of people. For example, employees of a company, family members, sports teams, etc Individual policyholder
Who purchases? Purchased by an employer, member of a family, representative of a team, etc Policyholder
Add-ons No or limited option for add-ons Add-ons can be sought by policyholders at any time
Process for claims Third-party administrator generally makes the claim on behalf of insured Claims can directly be made by the policyholder or life insured
Flexibility to choose sum insured Low flexibility to modify sum insured  The policyholder can determine the sum insured as per personal preference and requirement
Eligibility criteria For corporates, employees must be part of the organization to avail benefits of group health insurance Applicant must be at least 18 years of age
Exit criteria Once an employee leaves the organization, he/she will not be covered under the plan Once the policyholder attains 65 years of age or as per policy terms
Tax benefit No Yes
Pre-existing diseases Covered in most cases from day 1 Coverage available after completion of the waiting period.
Medical Check-ups Not required before the plan starts Required before the plan starts
Critical illness cover Not covered Covered if opted by the policyholder

Given below are the benefits and disadvantages of the individual and group health insurance plans: 

Benefits of individual health insurance and group health insurance

​​Individual Health insurance​ ​Group Health insurance
Offers flexibility in the coverage customization Less cost of coverage with better terms
Allows more control on deductibles, benefit limits, etc Does not require any test for coverage even if one is suffering from a pre-existing condition
Option to choose a policy as per personal preferences Free administrative services and claims support for corporate employees
Ideal for self-employed individuals who are not part of any corporate or organization ​Lower premium rates

Disadvantages of individual and group health insurance plans

​Individual Health insurance ​Group Health insurance
​Higher premium cost No flexibility or customization allowed on coverage benefits and limits
Mandatory physical checks before policy starts. Higher premium rates for pre-existing conditions Insurance is applicable only till the time the person is part of the team or company. Once the employment ceases, one can no longer avail benefits of the plan
Claims and inquiries have to be made in a personal capacity without any broker or administrative support Individuals do not have any authority or control over the plan

Conclusion

Many individuals view group plans as a backup cover apart from having an individual health cover. Both group plans and individual plans have unique benefits. Therefore, one must avail either or both depending on personal preferences while keeping in mind that insurance cover in today’s times is essential.

FAQs on Group & Individual Health insurance

  1. What is the main difference between group and individual health insurance?
    The primary difference between group and individual health insurance is that in a group plan, the insurance cover is shared among a group of people related through a certain condition, such as employment, blood relation, etc An individual health plan provides cover only for the individual policyholder.
  1. Which plan is better, group health insurance or individual?
    Group health insurance plans provide limited coverage as compared to individual plans. Therefore, an individual plan may be better when it comes to customization, add-ons, and wider coverage.
  1. How much tax benefit can I get from investing in an individual health insurance plan?
    Tax benefit of maximum Rs. 25,000 can be claimed under Section 80D of the Income Tax Act, 1961, for investing in an individual health plan. 
  1. Is it sensible to be enrolled under both group and individual health plans?
    It may be beneficial to be enrolled under both types of health insurance plans. With investment in both, a person can enjoy consolidated health benefits and a solid financial backup against medical emergencies.
  1. Is individual health insurance worth it in India?
    Investing in an individual health insurance policy can help one in receiving appropriate and timely medical care without impacting one’s savings. These plans offer a lot more than just hospitalization expenses.

 

 

 

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