buying individual health insurance vs group health insurance

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

Health Insurance is necessary for every individual, keeping in mind the rising medical costs and a spurt of lifestyle diseases amongst people around the world. In the case of a medical emergency, an individual can be impacted emotionally and financially. To get rid of the burden of unknown troubles, it is wise to opt for health insurance. Today as the COVID-19 situation is rampant, the crisis has made victims at large. People facing a financial crisis and if by chance, they face any medical emergency have made them realize why having a backup is useful.

Nevertheless, it is never too late to be free of this burden. Choosing apt health insurance as per one’s needs is as critical as deciding on having one. We have discussed further whether it is the right choice to opt for Individual Health insurance and why it is the right choice over a Group Insurance. Before delving into it, let us understand each of them in brief:

What is a Group Health Insurance Plan? 

Suppose that a person applying for a health insurance policy is an employee in a company, group health policy is the one provided as part of the employee benefits by an organization or by that company. The coverage and premium are decided based on the cumulative risks of all the individuals of the group. The coverage is uniform and will be available to the members so long as they are a part of the group. Now it has its pros and cons as compared to an individual health policy; before which let us understand a little about the latter.

What is an Individual Health Insurance Plan?

In very simple terms, as its name can interpret it, it is a kind of health insurance that an individual buys for himself/herself and his/her family. The policy coverage is usually customized to suit the specific requirements of the individual. At the same time, the premium is decided based on factors such as individual’s age, family medical history, lifestyle and type of coverage/policy selected. The policy remains valid until the time the insured person wants.

Now that we have understood the basic meaning of both the types, let us dive deeper into a few key fundamental differences between the two:

  1. Policy duration: 
  • Group Health Plan: The coverage is controlled totally by the provider and can be cancelled if the member is no longer a part of the group.
  • Individual Health Plan: It’s up to the policyholder to continue with the plan 
  1. Coverage:
  • Group Health Plan: Uniform coverage is offered to all the individuals of the group. One size fits all- type of a concept.
  • Individual Health Plan: The policyholder can customize the policy coverage.

Key Differences Between Group Health and Individual Health Insurance

Group Health Insurance:

Group health plans are much more affordable than individual health plans as the employer pays the cost. Due to bulk buying, the per-person cost is very economical for employers. This plan is preferred more by employers as there are tax advantages for them as well as the employees. It is the pre-acquired notion that if you don’t have any health cover plans for your future, this plan suits you the best. As far as the advantages of such plans are concerned, health cover for pre-existing conditions is the most significant plus point of group health plans. Acting as a cost-saver for both the company as well as the employees, it appears to be more of a bargain.

However, in case of affordable individual insurance packages, allows an individual to have the liberty to choose exactly what’s covered and what is not. One can base their medical history, type of diseases (criticality factor) and even the sum assured amount basis their earnings curate a policy. On the other hand, group insurance policies are constructed according to the company’s policies and the will of your employer. 

Individual Health Insurance:

Individual or personal health plans may be more expensive than group plans as the policyholder entirely bears the premium costs. Moreover, due to some permanent exclusions or a medical history of a specific illness, you may find it difficult to get individual health coverage. If you have dependents to look after, this plan is highly recommended to safeguard yourself.

Unlike group plans, personal health plans offer additional benefits such as no claim bonus. That is, policyholders become eligible for discounts or increased sum insured upon policy renewal. When compared to group plans that are applicable only if you are continuing with the employer, individual health plans are valid until the policyholder terminates the policy. 

  • Customizable benefits: Personal health insurance plans allow us to enhance the cover at any given point in time basis our requirement which doesn’t come along in case of group cover. It may also allow us to introduce the co-payment option if in case one wishes to save up on the premium cost. Full control over policy benefits one when they may want to add family members into the plan.
  • Cumulative bonus benefits: One of the significant drawbacks of the corporate cover is that one loses the accumulated benefits that may have generated over the term of the employment. This cannot be carried forward while making a career/job switch as it exists only within that particular organization. Group insurance does not offer any claim bonus facility. 
  • Post Retirement scenario: If one is solely secured under a group insurance cover then post-retirement, it would be challenging to opt for an individual plan as several plans have entry limits (age-wise). Which further breaks down to the type of diseases covered in the limits. One may want to derive maximum benefits at that age where it is peculiar. The chances of getting a decent insurance cover at that stage with an affordable premium having desired benefits covered are faint. More so the affordability factor plays a significant role at a later stage where one has been covered just with group insurance their whole life before switching to individual. 
  • Loan Facility: One of the significant advantages of individual cover is that we can use it as an asset while applying for a loan as it is ours to call. The loan provider is also confident in this case that the repayment will be made. 
  • Applicability: Only when employed with a particular employer, the group insurance lasts. As it depends even on the company size and its policies while switching jobs, one may or may not receive health insurance cover from your new employer. It is not predefined that an employer must provide for its employees under health insurance. The extent of coverage may also change – it may be more or even less depending on the policy, the sum invested and team size. This point is debatable as the current employer may have included far better benefits at an individual level for each of its employee covered under the plan or not, totally varies from company to company.
  • Premium: Many times, we commit the mistake to take decisions basis our short-term feasibility, which is the case with premium involved in health covers. In group cover, it may be shared with the employer or solely borne by the organization – leading to benefits without having paid for it. But it doesn’t last a lifetime. Which is why even though the individual plan may be a little costly, it provides sure shot coverage – as long as we want. 

Individual Health Insurance Reigns Supreme!

Based on the above outline, it can be well established that in the matter of health insurance, it cannot be one size fits all. Group health insurances cover individual employees or at times, members of their families under some criteria.

However, the most significant downturn for a Group Insurance is that it ensures that the individual is covered only till they are the employee and seized to protect them once they leave their job. It can very well be established that to safeguard oneself and their family, it is a smart idea to choose Individual Health Insurance over Group Health Insurance. 

It practically won’t fit in to say that Group Insurances are not suitable enough; however, based on the points discussed above, it would always be a wise plan to choose Individual Health Insurance. But many Indians decide to go with a hybrid plan, wherein they are ensured by both the employer’s Group Health Insurance and a private Individual Health Insurance. While we look at the bigger picture, in the case of the long term, the individual coverage would be ideal. 

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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