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Difference Between Group Health Insurance and Individual Health Insurance Coverage

Team AckoOct 20, 2021

A health insurance policy can be of multiple types, and you should choose a plan that suits your needs the best. Two of the most popular types of plans are Group Health Insurance and Individual Health Insurance. In these policies, the coverage they offer can be of a similar nature but who is eligible to enjoy it is what makes these plans different from each other. Let's dive deep into the differences between Corporate Group Health Insurance and Individual Health Insurance:

Difference Between Group and Individual Health Insurance

Group Health Insurance vs Individual Health Insurance:

A Group Health Insurance policy covers a group of people related to one another by at least one common factor. For example, employees of the same company or family members related by blood. It offers coverage to more than one person. On the other hand, the Individual health insurance policy covers only one person i.e. the policyholder.

Here is a table that shows the differences between Employee Group Health insurance and Individual health insurance plans:

Parameter Group Health Insurance Individual Health Insurance
General meaning A group health insurance plan covers a group of people under health insurance. An Individual health insurance policy offers coverage to the policyholder.
Who is insured? The insured person and related family members. One person i.e. the policyholder.
Who is the purchaser? Group Health Insurance is usually purchased by an employer (or the main member of the family for the Family Floater Insurance plan). The policyholder purchases an Individual health insurance plan.
How much control does the insured have over the plan? Limited control (The employer or the purchaser has control over the coverage and add-ons of the plan). Full control (The policyholder can control the coverage and add-ons of the plan).
Option to buy Add-ons: None or limited The policyholder can buy any of the available add-ons.
Claims: Claims are usually made through a third-party administrator. Claims can be made directly with the insurance company.
Available Sum Insured: Low as compared Individual Health insurance. Can be between Rs. 5 to 10 Lakh. Option to choose a higher sum insured as compared to a Group health policy. It Can be between Rs. 5 to 15 Lakh.
Eligibility Criteria: Should be a permanent employee of an organization Must be at least 18 years of age
Exit criteria: The insurance plan ceases to exist when the employee leaves the company or gets retired. The policyholder reaches the age of 65 years (the exit age depends upon the terms of the insurance company).
Tax benefit: No Yes
Coverage for Pre-existing diseases: Mostly from day 1 After the completion of the waiting period.
Maternity Benefits: Covered Need to be purchased under add-ons.
No Claim Bonus: Not Applicable Applicable
Medical Check-ups before purchase: Not required Required
Coverage for Critical Illness: No If chosen by the policyholder.

Conclusion:

Individual and group health insurance plans offer different benefits and serve different purposes. One should always buy health insurance as per the requirement to get adequate financial back-up in the time of need. As per new rules, a person can be covered under multiple health insurance policies. Thus, it is strongly advised that you create a solid health insurance portfolio to avoid any unwanted financial risks in case of a medical emergency. One should ideally be covered under an Individual plan, a Group plan from the employer (if applicable) or family health insurance plan, and a critical illness cover.

Also, Read: 10 Reasons Why Companies Should Offer Employee Health Insurance

Frequently Asked Questions:

One may have questions related to health insurance. This section helps you with such common question you may have after reading the above article:

1) What is the main difference between Employee Group and Individual health insurance?

The main difference between Group Health Insurance and Individual Health Insurance is that in a Group plan, the coverage is shared among a set of people related under a certain condition. Whereas an Individual health insurance policy covers only the policyholder.

2) Is Group health insurance cheaper than Individual health insurance for a policyholder?

A Corporate or Employee Group health insurance plan can be cheaper if bought by the employer. Other Group plans like family health insurance can be more expensive as compared to Individual health insurance because the coverage is extended to more members other than the policyholder.

3) Which plan is better, group health insurance or Individual?

A Group health insurance plan may offer limited coverage as compared to an Individual plan. Thus, in some cases, the Individual plan can be better than a Group plan.

4) Should a person be enrolled under both Group and Individual Health insurance plans?

Yes, it is an excellent idea to be enrolled under both types of health insurance plans. This helps a person create a strong portfolio. A consolidated health insurance plan with multiple benefits can provide a solid financial back-up against most types of medical emergencies.

5) What are the advantages of a Group health insurance plan?

A Group health insurance plan is very helpful to get a basic financial back-up against medical emergencies for the employee and his/her family. The insured does not have to spend on premium but can still enjoy the benefit of insurance coverage. Some organizations provide an option to buy top-ups that increase the amount of sum insured. These are the main advantages of a Group Health policy.

6) What are the advantages of an Individual Health insurance plan?

An Individual health insurance plan can provide full coverage to the insured person in various medical conditions. The policyholder has complete control on which policy to buy and from which insurance company. Additionally, the policyholder can enjoy discounts like No Claim bonus if no claims are made during a certain policy period. These are the advantages of Individual health insurance plans.

7) What is a health insurance premium calculator?

A premium calculator helps you understand how much money you need to invest in buying a health insurance policy. You can find many premium calculators online. Nowadays, insurance companies incorporate such tools in their purchase journey. All you have to do is enter a few details related to you and the plan you are looking for and the premium calculator will give you a quote for the most suitable policy.

8) How much tax benefit can I get from buying an Individual health insurance plan?

According to the current year's financial budget, a person can claim a tax benefit of Rs. 25000 under Section 80D of the Income Tax Act, 1961. Note that the amount of benefit may change in accordance with the budget.

9) What are the general exclusions of a Group and Individual health insurance policies?

Usually, corrective dental and cosmetic treatments are not covered (unless the need arises due to an accident). Cost of treatment for self-harm, injuries due to being involved in criminal activity, injuries due to war, injuries due to being in an intoxicated state, etc. are not covered.

10) What are the similarities of Group and Individual Health insurance plans?

Group and Individual Health insurance plans both provide a financial back-up when the insured person faces a medical emergency. They provide coverage for hospitalization and other expenses.

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