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buying individual health insurance vs group health insurance

7 Reasons Why You Should Buy Individual Health Insurance Over Group Health Insurance Plan

If you are an employee, there’s a good chance that your healthcare needs are already covered by your employer. It’s precisely why group health insurance plans exist. However, corporate plans come with their own set of limitations. This is exactly why the comparison of individual vs group health insurance is done very often.

Here are 7 reasons why an individual health plan is a more sensible option when compared to a group health insurance plan:

  1. Flexibility in customisation
  2. Better insurance 
  3. Coverage irrespective of employment status 
  4. Loan facility
  5. Control over copay, coinsurance, and deductibles
  6. Lifetime renewals
  7. Benefits — tax & cumulative

What is an Individual Health Insurance Plan? 

An individual health insurance plan is a policy you purchase on your own rather than through an employer, union or government-run association. It could either cover your individual healthcare needs or be coupled with those of your family. 

Individual Health Insurance vs Group Health Insurance

Take a look at the table below to compare individual vs group health insurance:

Individual Health InsuranceGroup Health Insurance Plan
Flexible; greater degree of customization possibleNo customization possible; it is a one-size fits all plan
Buyer controls benefits and payment termsEmployer dictates benefits and payment terms
Higher premium but control over co-pays and deductiblesLower premium but limits are determined by employer
Continues even after you lose/change jobsCoverage is limited to the tenure of employment

Even though individual health plans are associated with higher premiums, you can customize them as per your needs to make them more affordable. Basically, the more benefits you opt for, the greater your resulting premium will be. However, this also means that your actual out-of-pocket medical expenses for healthcare become lower. The top mediclaim for individuals offer excellent coverage features with high customizability and allow them to make sure that their medical expenses slim to zero with robust financial protection.

Group health insurance plans, on the other hand, are the more economical option, but they offer no control over copays and deductibles. Some of the benefits of group insurance policy are their economical prices, excellent value for money, tax incentives for the employer, and easier claim settlement.

Why should you choose an individual health plan?

When we draw the comparison individual vs group health insurance, the individual health plans definitely have an edge over group health insurance. Here’s discussing the advantages individual health plans have over group health insurance:

1. Flexibility in customization

  • You can choose the best health insurance provider and health plan based on your needs.
  • You can add new members and change/renew plans or policy benefits as required.
  • You can select a high-quality plan that includes your preferred network of doctors and hospitals. 

2. Better insurance 

  • With individual plans you decide the level of coverage as per your medical needs and affordability. Therefore, you have better financial protection and best medical cover according to your needs.
  • In case of group insurance, health insurance coverage provided is typically Rs 2 to 3 lakhs which may not always be enough. 
  • Further, if a company faces financial crisis, it might either exclude your family members or reduce the overall coverage amount.

3. Coverage irrespective of employment status

  • In the event that you lose your job, you don’t have to lose your health insurance as well. 
  • Coverage continues even if you switch jobs. 
  • Retired individuals can also avail the benefits of individual health plans provided they meet the entry-age limit. 
  • On the other hand, corporate covers do not provide coverage after retirement. And starting an individual insurance at 60 could mean long waiting periods and taxing sub-limits. 

4. Loan facility 

  • Individuals can claim loans against an insurance plan.
  • Loan providers readily accept them as assets to remit loans. 

5. Control over copay, coinsurance, and deductibles

Copay, coinsurance and deductible limits are set by employers in case of group insurance plans. Therefore, even though group health insurance plans have cheaper premiums, employees may have to pay costly medical bills due to expensive deductibles or copayments.

  • Copayment: Copay is the amount you pay the doctor or clinic after every visit. 
    • With individual health plans, you can opt for coverage where copayments are inexpensive.
  • Deductible: It is the amount you pay before health insurance starts to cover your medical bills.
    • A cheap health plan usually means higher deductibles. 
    • With individual health plans, you have the option to choose a plan with a low deductible. 
  • Coinsurance: This is the percentage cost you pay against a satisfied deductible claim.
    • Individual health plans give you control over such costs which may otherwise remain hidden.

6. Lifetime renewals

  • Private health plans provide long-term coverage as a tradeoff for higher premiums. 
  • They are open to renewals lifelong without restrictions of any sort. 
  • Lifetime renewability is especially helpful for retired senior citizens. 

7. Benefits — tax & cumulative

  • Individual health plans come with tax-deductible premiums provided that your employer offers a health reimbursement option.
  • Individuals or HUF can avail tax benefits under section 80D. 
  • Individuals can carry forward cumulative benefits If they change jobs. 
  • Private plans also offer claim bonus facilities as opposed to corporate covers.

Bottom line

The benefits offered by individual health plans definitely do seem to have the edge over the benefits of group insurance policy. Individual plans offer the best medical cover to each policyholder by letting them customize the plan according to their needs. Corporate covers usually fall short of providing thorough coverage. So, if you are shopping for health insurance, individual plans are the way to go. 

In case you are an employee covered under a group insurance policy, you can opt for an additional individual health plan to bridge your needs. 

Individual and Group Health Insurance

Is group health insurance more expensive than individual health insurance?

As the group cover is funded by the organization they work in, at an individual level if the premium cost is not co-shared with the employer, it becomes cost-free. Premium costs apart from the sum assured are invested solely by policy taker in case of individual cover.

How is premium deducted if co-shared in group insurance?

Premium is deducted from an employee's monthly salary.

Are medical check-ups mandatory in case of both types?

It is as below -
Group Health Plan: For regular coverage, there's no need for prior medical check-ups.
Individual Health Plan: Medical check-ups are a mandatory requirement for buying personal health plans in most of the policies offered by insurance providers.

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