With the increase in the occurrence of critical illnesses all around us, you need a shield in the form of health insurance for medical emergencies. However, insurance companies in India offer several products and it can be confusing to choose the best one for you.
Of the many choices in health insurance, two are individual and group. Today, we are looking at the chief ways in which these two types of insurance plans differ.
Key Takeaways
Immediate Coverage: Group plans are superior for immediate needs because they typically waive waiting periods for pre-existing diseases, providing a safety net from the very first day.
Cost Efficiency: For employers, group plans are a powerful, low-cost incentive. For employees, it is a “free” or subsidized benefit that covers the entire family under one master policy.
The Portability Risk: The biggest drawback of group insurance is its lack of portability; if you resign or retire, your coverage usually ends, whereas an individual policy stays with you for life.
Underwriting Ease: Individual policies involve strict “underwriting” (medical checks and declarations), whereas group policies offer blanket coverage to all members regardless of their current health status.
Renewal Stability: Individual insurance offers the security of “lifelong renewability,” meaning the insurer cannot refuse to renew your policy just because you made a large claim. Group insurers, however, may re-evaluate or cancel the entire group’s policy based on claim history.
Points of difference – Group and Individual Health Insurance
People usually buy individual health policies themselves. Group health policies are usually bought by the head of the group or company on behalf of the entire group. Individual and group health insurance plans are different in several key ways but both have distinct benefits. So, ideally, you must have your own individual insurance but also encourage your company to offer group insurance to employees.
Coverage
Group health insurance offers healthcare coverage to a group of people. Groups, according to the Insurance Regulatory and Development Authority of India (IRDAI), can include employers and employees, banks and account holders, cultural associations and their members, or residential societies and their members. Some of the best group health insurance policies in India provide coverage to members, their spouses, dependent parents, and children. However, coverage benefits may vary from one insurer to another. Additionally, it would depend on the choices that the insured makes. The extent of insurance can vary by member. On the other hand, individual health insurance usually covers only one individual, or at best the individual’s family. All have similar covers. And, these would be based on choices made when buying the policy.
Cost
Usually, group health insurance plans are cheaper than individual health insurance policies. This is what makes group plans advantageous for employers. They can spend less and offer the incentive of medical insurance for employees and their families. However, group health premiums can vary year on year based on claims. In individual insurance, the rates vary only with age and not with previous claims.
Coverage for pre-existing conditions – Group and Individual Health Insurance
Before you buy an individual health insurance plan, your insurer may ask you to undergo some medical tests and to declare any pre-existing diseases. Your application for insurance may be rejected if you are diagnosed with a critical illness. In other cases, certain pre-existing diseases may not be covered for the initial two to four years of an individual policy. However, group health insurance generally provides medical coverage to every group member included in the policy, immediately, regardless of pre-existing conditions.
Summary Table: Group vs. Individual Health Insurance
| Feature | Group Health Insurance | Individual Health Insurance |
| Purchaser | Employer or Group Head. | The individual policyholder. |
| Cost | More affordable (Bulk/Group pricing). | Higher (Based on age and health). |
| Medical Tests | Usually not required for entry. | Often required, especially for older ages. |
| Pre-existing Diseases | Covered from Day 1 (generally). | Waiting period of 2 to 4 years. |
| Continuity | Ends if you leave the group/company. | Continues for life (subject to renewal). |
| Renewability | Insurer can decline renewal or cancel. | Guaranteed lifelong renewability by law. |
| Customization | Standardized for the whole group. | Highly customizable to personal needs. |
Renewal
If you’ve opted for different individual health insurance policies that cover several people in your family, then you have to renew each policy on or before its expiry date. This can mean remembering several different dates for different policies. However, a group plan can include multiple individuals, all specified in the master policy, which would have a single renewal date.
Group health insurance must be renewed each year and the insurer can decide not to renew as well. Also, in certain adverse claims situations, the health insurer may cancel the group insurance before renewal. However, in individual insurance, insurers have to renew the insurance life-long and cannot unilaterally cancel the insurance.
These are some of the chief differences between individual and group health insurance plans. Both have a meaningful role in your health planning. As an employer, if you are considering purchasing group health insurance for your employees, we can help you. At SecureNow, we offer group health insurance from all the good insurance companies in India. You can explore these plans here. And we can help you make the best choice based on your needs.
Frequently Asked Questions (FAQs)
1. Should I buy an individual policy if my company already provides group insurance?
A) Yes. It is highly recommended to have both. Group insurance is excellent for current coverage, but if you change jobs or retire, you might find it difficult to get a new individual policy later in life if you develop health issues. An individual policy acts as a permanent backup.
2. Can an insurance company refuse to cover me in a group plan if I have a chronic illness?
A) Generally, no. In a group health scheme, the insurer covers the entire group as a single entity. They typically do not pick and choose members based on health, which is why pre-existing conditions are often covered immediately.
3. Why does the premium of my individual policy increase while group premiums stay relatively low?
A) Individual premiums are linked to your age; as you get older, the risk increases, and so does the cost. Group premiums are calculated based on the average age and claim history of the entire group, allowing the insurer to offer a much lower “per-head” rate.
4. What happens to my group insurance coverage if I leave my job?
A) Usually, the coverage terminates on your last day of employment. While some insurers allow you to convert a group policy into an individual one, it often comes with a significant increase in premium and may require fresh medical underwriting.
5. Is a medical check-up mandatory for group health insurance?
A) In most cases, medical check-ups are waived for group insurance, even for older employees. This is one of the biggest advantages for those who might otherwise be rejected or charged high premiums for an individual policy.
About The Author
Mayank Sharma
MBA Finance
He is a professional who brings extensive knowledge and expertise to the field of group health insurance. He has dedicated 7years to helping individuals and businesses navigate the complexities of insurance. Having worked closely with numerous clients and insurance providers, he deeply understands the nuances of group health insurance policies. With a reputation for providing insightful and informative content, he leverages his industry experience to educate readers about the importance of group health insurance and its benefits. Through their articles, Mayank Sharma aims to empower individuals and businesses to make informed decisions about their healthcare coverage, ultimately promoting healthier and more secure communities.
