Although group health insurance is provided to employees, in several cases, the coverage is extended to their family members.
Offering health insurance to employees has become a legal as well ethical responsibility of employers. Among all the available options, the two most widely discussed types of health insurance are group health insurance and individual health insurance. While group health insurance stands out for its practical, comprehensive, and cost-effective solution for organisations, individual health plans offer customised coverage.
However, understanding the difference between group and individual health insurance in terms of coverage, benefits, premiums, inclusions, and exclusions is essential to make an informed decision.
What is Group Health Insurance?
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Group health insurance is a policy that provides medical coverage to a group of people. It is a business insurance policy purchased by employers, cooperative societies and groups for their employees and members. As it provides coverage to a group of people, the premium price of this policy is quite affordable because the insurance company’s risk is distributed among multiple policyholders.
Although group health insurance is provided to employees, in several cases, the coverage is extended to their family members.
What is Individual Health Insurance?
Individual health insurance is a policy that provides medical coverage to an individual policyholder. It includes financial coverage for expenses such as hospitalisation, ambulance, and medicines, among others. The policy can be purchased by an individual who wants to protect their medical well-being, or individual policies can be purchased for each family member.
Individual health insurance can be customised as per individual health needs and thus has a higher premium price than GHI.
Difference Between Group Health Insurance and Individual Health Insurance
Here are the differences that need to be understood between the two policies before choosing one.
| Basis | Group Health Insurance | Individual Health Insurance |
| Meaning | Provides coverage to a group of people | Provides coverage for an individual policyholder |
| Who Can Buy? | Employers, cooperative societies or groups | Individual people |
| Who Gets Insured? | A group of people and their family members | The policyholder |
| Eligibility | One should be a permanent employee of a company or a permanent member of a group | Must be 18 years or above(children get coverage if the same insurer covers the parent(s)) |
| Lum Insured | Less sum insured option | Higher sum insured options |
| Pre-policy Medical Check-up | Not required | It might be required, especially in the case of senior citizens |
| Pre-existing Illness Cover | Provided from day 1 | Coverage is provided after the waiting period |
| Critical Illness Cover | No provided | Provided if opted for by the policyholder |
| Maternity Cover | No provided | Might be provided under certain plans |
| Customisations | Not available | Plans can be customised as per the policyholder’s needs |
| No Claim Bonus | Not available | Available |
| Tax Benefits | Not available | Available |
| Comparison Flexibility | No flexibility to choose the insurer, as the employer chooses it | Full flexibility to compare and choose the plan or insurer |
| Control | Limited control as the employer decides the coverage | Full control to change the coverage limit |
| Claim Procedure | The TPA raises claims | A claim is raised directly to the insurer |
| Premium Payment | The employer pays the premium | The policyholder pays the premium |
| Exit | Policy coverage ceases as soon as the employee leaves the company | The policy usually comes with a lifetime renewability option |
Advantages of Group Health Insurance
- GHI is a business insurance policy that is cost-effective for employees, as the employer provides a significant portion of the coverage.
- Under a group health insurance policy, the policyholder is not required to undergo a pre-policy medical checkup.
- The policy provides coverage for pre-existing illnesses from the very first day of getting insured.
- No burden on the policyholder to manage the policy premiums or other requirements, as the employer handles everything.
Advantages of Individual Health Insurance
- Individual health insurance comes with the facility to customise the plan as per one’s medical requirements.
- The policy buyer has the freedom to compare multiple plans from various insurers and choose the one that best fits their needs.
- Individual health insurance coverage remains unaffected by changes in the employer or job; the policyholder will be covered as long as they continue to pay the premium.
Group Health Insurance Vs Individual Health Insurance: Which One to Choose?
Now that there is a better understanding of the difference between group health insurance and individual health insurance, making a choice becomes easier. Group health insurance is a great policy to get coverage on a budget. On the other hand, individual health insurance coverage can be selected as per the individual’s medical needs.
It is recommended that, while individuals obtain group health insurance from their employers, they should also consider supplementing it with individual health insurance for themselves. They can choose a reputable insurer, such as TATA AIG, for additional coverage in the face of rising healthcare inflation.
