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How to Shift from Individual Insurance to Group Insurance Policy

With a whole range of attractive, reasonable and affordable health insurance policies that are available in the market, a person is bound to get confused as he faces a problem of choice. There are many variations across policies and companies providing more-so similar benefits with few clauses here and there. Further, there are so many different categories and types of health insurance policies providing just adequate coverage. 

It is easy to feel like a kid in a candy shop who is just overwhelmed by choices, isn’t it?

Today, we are going to discuss Group health insurance policies and Individual or personal health policies. It is also essential to understand the differences, similarities, benefits and at the end, what works best for you. 

Let’s have a look at what Individual and group insurance policies are, the benefits of each of them and how you can shift from individual to group health insurance

Group Health Insurance Policy

As the name suggests, a Group Health Insurance policy usually provides coverage for a group of individuals, which might comprise of employees of a company, members of an organization or merely, members of a family. Yes, you heard it right, a single plan covering all the members of the group. 

These policies are not customized or explicitly designed to suit each person’s needs, but for the betterment of the entire group. Since these policies are not customized to individuals, they are generally more affordable and less pricey in terms of the cost of the policy, i.e. premium amount is lower than an individual health insurance policy. Group policies usually cost less than individual ones because the group gets the advantage of being bulk. However, group policies can only last until the membership of an individual in a group. For this reason, the coverage of group policy is uniform and limited. 

Mostly, all the corporates and small business opt for a Group health insurance plan for their employees. The company generally pays the premium on behalf of all the employees. In a group health insurance plan, there is no prior health check-up done for each individual.

Individual Health insurance policies 

Individual health insurance policies provide coverage for a single individual. Therefore, the individual opting for personal health insurance policy gets to choose the type of benefits and the insurance coverage given their expectations, lifestyle and other needs. 

Since individual policies can be customized and cherry-picked, they usually offer adequate policy coverage. Premiums also differ according to the policy and the benefits opted for. While premiums are directly deducted from salary, the premium for individual policy usually has to be paid monthly or quarterly by the Individual. 

The cost of the policy usually determines the insurance decision. The insurance provider calculates the premium amount based on the inputs given by the policyholder. Many factors like age, lifestyle, medical condition, overall insurance coverage etc. are considered while calculating the premium on the policy. Therefore, there is a mandatory health check-up done in all the individual health insurance policy.  

What are the other differences in these plans?

These two policies are usually not the two sides of a coin, but different ball games altogether. This makes it crucial to analyze the pros and cons of each, to decide which suits you the best. Apart from the differences above, there are other nitty-gritties in the contractual agreement of these two policies that you need to be aware of.

  1. Waiting period clause: 

In case of an individual health insurance policy, there is a pre-defined waiting period in the contract for all pre-existing medical diseases. However, there is no such clause in a group insurance policy, and therefore, the member of the group can avail these benefits from day one itself. 

  1. Medical screening for pre-existing medical conditions:

More often than not, group health insurances do not require health screening for pre-existing ailments. All the pre-existing medical diseases are covered in a group insurance policy from day one itself. However, in case of an individual policy, it is crucial to conduct a medical health check-up to understand the medical condition of the Individual before the insurer can underwrite the risk. Based on the reports, the contractual term of the insurance policy is decided and finalized. 

  1. Maternity benefits:

Maternity Benefits are also usually covered in a group insurance policy from day one. In case of an individual health insurance policy, the maternity costs of medication are not covered, unless specifically requested to cover them by paying additional premium.

  1. Others:

Corporate plans generally have a long-lasting relationship and are easier to file an insurance claim in case of a medical emergency. It ensures employee loyalty and teamwork from the employees while sustaining goodwill for the company for ensuring the welfare of its employees. Additionally, the policy also makes it more flexible for the company to pay for premiums either monthly, yearly or quarterly. The sum insured, however, varies according to the salary package and you might have to pay additionally to include some extra add-ons for a more comprehensive coverage. 

Similarly, Individual Health Insurance also has some unique benefits that are not shared with group health insurances. These include a more adaptable policy for your needs. You can choose a policy which suits your lifestyle better. Maternity benefits are often not included in the coverage of this policy. An individual cannot claim a group a health insurance policy. 

How to Migrate from Individual to Group Health Insurance Policy 

We all understand that health insurance is one of the most basic and critical aspects of any financial plan. Financial planners say that a health insurance plan should be a priority while planning your finances. Let us assume that you have an existing health insurance plan. 

What happens if you wish to move out of the current plan into a new plan? What happens when you change your job or quit to start your own venture? Or what happens in an exactly opposite situation where you move into a new group insurance plan after joining a new company? Do you think you would be losing the benefits of health insurance cover?

Well, indeed, NO. As per the IRDA guidelines, if you change your Individual or group health insurance policy from one insurance company to another, you do not lose any of the benefits that you may have accumulated in your old policy. 

As per the IRDA Regulations 2016 portability guidelines, “Individual members, including the family members covered under any group health insurance policy of a general insurer or health insurer shall have the right to migrate from such a group policy to an individual health insurance policy or a family floater policy with the same insurer. Thereafter, the insured has the right to avail portability with any other insurer.”

The new IRDAI guideline, thus made it easier for people to port from employer-provided health insurance to individual health insurance policy. In such a case, you will have to find out the type of policy your employer is willing to provide. This can be of three types-

  • Preferred Provider Organization (PPO)
  • Health Maintenance Organization (HMO)
  • High Deductible Health Plan (HDHP)

Under Preferred Provider Organization (PPO), an employee is free to choose his preferred health insurance provider. However, depending upon the choice, he / she will get additional or reduced benefits. 

On the other hand, under the Health Maintenance Organization (HMO), one’s insurance company is the primary health care provider. As a result, there’s limited scope for being able to choose your treatments and doctors. 

Lastly, a High Deductible Health Plan (HDHP), has lower premiums but higher personal costs which the employees will be expected to pay from his / her pocket. 

Ready for migration?

Whatever your compulsion be for shifting from individual to group health insurance, we hope that this article helped you differentiate between the two policies, analyze the pros and cons of each option as well as the implications of shifting from one policy to the other. 

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