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HEALTH INSURANCE

What Is The Difference Between Group and Individual Health Insurance?

Karan Sharma Karan Sharma 01 April 2019

Does your employee health plan provide adequate cover for you and your family? Find how it is different from an individual health insurance plan.

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A health insurance policy is an important part of every individual’s life. Since age brings many uncertainties, it is not only wise but also a smart decision to be prepared for the same. An individual health insurance policy is your best defence against all the unwanted health related offense than life throws at you. Not only does a health insurance policy provide protection for you, but you can enrol your entire family and give them the health protection they deserve at an affordable cost.

Medical emergencies can easily wipe out all of your accumulated savings, and people with the best of health also tend to fall sick. Keeping these things in mind, you should get a health insurance policy at the earliest.

How is a group health insurance policy different from an individual health insurance? Read ahead to know more.

Definition

Individual Health Insurance - As the name suggests, it is a comprehensive health insurance policy which provides cover for you or your family (if taken on a family floater basis) at an affordable premium rate. The cover is based on the sum insured, which is the amount that the insurance provider will release in order to pay for the medical treatment. This is based on the principle of indemnity, which, in the case of individual health insurance, is the compensation which the insurer pays to the insured for any loss arising out of medical emergency.

For example, if you purchase an individual health insurance plan which comes with a sum insured of ₹2 lakhs, the insurer will compensate an amount only upto ₹2 lakhs. In case the bill for medical treatment exceeds more than the sum insured of ₹2 lakhs, the additional amount will have to be borne by the insured.

Group Health Insurance - Group health insurance is the insurance plan which an organisation/company purchases in order to provide health cover for their employees and their family. The employees can avail the benefits of health insurance under the group cover plan provided by the company.

Group insurance is highly popular among corporations of all sizes across India as it offers benefits both for the company (tax benefits) as well as employee satisfaction.

Now that you are aware of the basic difference between these two, let us get ahead into the specific details.

Cost of Insurance

In terms of expenses and fees, group insurance cover costs less or nil as it is paid by the employer and not the employee. But employees do have the option to get additional cover/benefits for their family/children/spouse at the cost of additional premium. The premium is usually a small amount and deducted from the monthly salary of the employee. This ensures that the employees do not lose their major chunk of income as the premium payment is evenly distributed throughout the financial year. The features mentioned above is also the primary reason why salaried workers do not opt for an additional health insurance plan as they are already being covered by their employer.

An individual health insurance plan is more expensive than a group plan. The premium amount is completely borne by the buyer. This is an ideal option for individuals who have a lot of dependents or for those seeking a back-up secondary health insurance plan.

Obtainability

There are often situations based on the medical history of an individual which might lead to a rejection of an individual health insurance policy. With a group insurance policy, any individual who serves as an employee of the company and his/her family member is entitled to a group health cover by default as the employer has already been granted an approval for the insurance policy by the insurer. This is because group insurance providers do not look into the individual employees but look at the number of employees which are to be covered under the plan. This, in return, makes it easier for employees to get an insurance cover for himself and for the entire family.

With an individual health insurance, you have full customization access in order to change the terms of the policy. This is absent in a group insurance cover.

No Claim Bonus or NCB

A no claim bonus or NCB is a type of benefit offered by health insurance policies. Under an NCB, if you do not make a claim in a single financial year or more, you will be entitled to a discount on premium renewal or an increase in the sum insured at the same premium. This benefit comes with almost every individual health insurance policy.

In a group insurance policy, even if an employee does not make a single claim over the financial year, you will not be entitled to any NCB. NCB does not come with any group insurance plan.

Validity

As long as you pay the premium on time, an individual health insurance plan will be applicable at all times until the policy is dissolved.

Under a group insurance policy, you are entitled to cover as long you are employed within an organisation. The moment you resign, the group cover will cease to exist. The only option which you will get is to convert your group cover into a permanent life or health. This process is long, tedious and consumes more time than simply buying a new individual health insurance policy. Also, you will be required to pay more premium than before. If you decide to convert, ensure that you have the certificate of coverage which acts as a proof that you were covered under a group plan. This is a mandatory document required by the insurance company.

Which is better?

To begin with, health insurance should always be kept as a priority instead of an option. Having two health plans are better than one, in case one insurer rejects your claim, you can always go back to the other one. Hence both, group and individual health insurance cover are beneficial.

Karan Sharma
Written by Karan Sharma
Content Specialist and Strategist, foolishly creative and always ready for a game of 'Call of Duty'.
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