Group Health Insurance

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What are the advantages and disadvantages of a group-based indemnity policy?

A Group based indemnity policy comes with both advantages and disadvantages.

Advantages –

1. Waiver of medical underwriting – Medical tests are not mandatory for group insurance schemes. Hence policy issuance is guaranteed 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 have fixed benefits that cannot be customized 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 –

1. Non-selective – Group policies are non-selective, i.e., everyone who is a part of the group has to be covered under the program.

2. Claims linked 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 group policies are not advised 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 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 are not covered in the group polic ies.