A Group-based indemnity policy comes with both advantages and disadvantages.
Advantages of Group-based indemnity policy –
1. Waiver of medical underwriting – Medical tests are not mandatory for group insurance schemes. Hence, guaranteed policy issuance for members who may have pre-existing medical conditions.
2. Waiver of waiting period for pre-existing diseases – Individual policies generally have a 2-4 year waiting period for pre-existing diseases before they can make a claim. Group policy provides cover for pre-existing diseases from day one.
3. Maternity benefits – Individual policies generally have a minimum of 9 months or higher waiting period for maternity-related claims. Group policy provides cover for maternity claims from day one.
4. Newborn cover – Individual policies cover newborns after 3 months of birth. Group policies provide cover for newborn babies from day one.
5. Optional benefits – Individual policies give fixed benefits, cannot customize based on an individual’s requirement. Group policies are tailor-made, i.e., you can choose the benefit structure for the members of the group. There are options to add from OPD, vision & dental, routine medical check-ups, and other benefits to the scheme enhancing the coverage that you get.
Disadvantages of Group-based indemnity policy-
1. Non-selective – Group policies are non-selective, i.e., the program covers everyone who is a part of the group.
2. Claims linked to renewal premium – Renewal premiums in a group policy are linked to claims in the policy. Hence if the claims are adverse (can happen in an odd year with limited group size) renewal premiums are bound to shoot up. Hence, do not advise group policies where premiums are contributory.
3. Limited sum insured – Group policies offer a significantly lower sum insured compared to individual policies. The average sum insured in a group policy is INR 3L while in an individual policy is INR 10L. Hence it may not meet the need of individuals who are looking for optimum coverage for their family members.
4. Limited benefit structure – Benefits in a group policy are designed to suit the requirements of the group. It is not the best policy in the market. Most individual indemnity policies now cover expenses on new treatment methods like cyberknife, cochlear implants, stem cell, oral chemotherapy, air ambulance, Ranibizumab injections, etc. which do not cover in the group policies.