What Is The Difference Between Group and Individual Health Insurance?

Health insurance is an essential financial investment for everyone. Nowadays, companies often provide health insurance as a part of the perks they offer to the employee. Most of the companies prefer group health insurance over individual health insurance. Though these two types of insurance policies provide similar coverage, there is a notable difference between the cost and customization options available with the plans.

When you are opting for a health insurance plan, the first thing you have to do is to understand what the benefits that particular insurance policy is offering are. To under the difference between group and Individual Insurance, let’s start with their definitions.

Group insurance is a basic insurance plan that an organization buys for the employees. There are two options to go ahead with such plans. The first is that the organization gets a custom plan based on its budget. The second option is to choose an existing plan designed by the insurance company.

Individual health insurance plans, as the name suggests, are available for those who want to get insurance for themselves and their families. Some may think that it is available only for a single person, but the reality is you can cover even your whole family under the same health insurance plan.

Now, once we are clear with the definitions, let’s discuss the differences.

  • Cost

Think about it in the way you are going for grocery shopping. You go to supermarkets because you can buy products in bulk at a lower price. It is the same with the group insurance plans. As these insurance plans cover all employees in an organization, the cost per employee is much lesser financial pressure on the organization. Some organizations deduct the premium from the salary of the employee, while others include it in the CTC or Cost To Company. Here the employees do not have to pay the premium separately unless they are opting for a rider. This is one of the reasons many employees do not go for an additional individual cover if they feel the group insurance is covering everything they need.

  • Convenience and control

There are many reasons for which an insurance company can deny health insurance to a particular individual if he is going for an individual health insurance plan. The reasons may vary from health to financial position of the person. However, the case is different in group insurance. Every employee of the company, irrespective of age, or health condition, is eligible for the health insurance package. However, in the case of an individual health insurance plan, you will have more control over the features, premium cost, and coverage. Based on your current health conditions and family’s medical history, you can opt for plans and riders, which is sometimes not possible in group insurance plans.

  • No Claim Bonus

In case of an individual health insurance plan, you are eligible for the No Claim Bonus on the renewal. In Group insurance plans, the insurance companies do not provide any such option. Also, in case an employee claims the cover on the ground of any health problem, the employer has to pay an additional premium. In case the employer refused to pay it, the overall cover will be reduced for that particular year.

  • Applicability

The group health insurance is available only till the time your employer is paying the premium, or you are part of that company. In case you are retiring or leaving the company, you will have an option to convert it to an individual plan with the same insurance company. However, you will have to pay a much higher premium than before. Thus it is wise to convert the existing group health insurance to individual health insurance only if the premium you have to pay is lesser than before.

Which one should you choose?

Group insurance is an excellent choice for organizations as it costs much less. It is also suitable for those employees who are unable to get individual health insurance cover. However, there are many reasons for which you should go for an additional personal health insurance plan no matter your company is offering group insurance or not. The individual health insurance plans not only give you more control but also provide you with the option to get cover for your family.

Once you leave a company, the new employer may not provide health insurance as it is not mandatory. In the case of group insurance, you may not be able to convert it to individual insurance after retirement based on your health and finances. Thus it is better to understand the difference and seek professional’s advice in case you are confused.