Home Health The trade-off between individual and group health insurance

The trade-off between individual and group health insurance


Health insurance is no more a choice, it’s a necessity. With several health threats prevailing these days, the expenses on health and treatment are increasing. The increasing cost of medical assistance, examination, and testing are adding to the plight making it indispensable for everyone to invest in health insurance. Evaluating today’s best overall health insurance option is also made easy with the online comparison portals. While the data on these websites help you to pick the most appropriate insurance plan, there is no much information to clear your concepts about various insurance jargon. Two such terms are individual and group insurance. Many people are aware of the nuances of the two types of plans. However, they do not have detailed knowledge about them. While both the types of policies offer coverage, they differ prominently. Here are the differences between the two types based on major aspects.

  • Meaning

The group insurance, as the name suggests, provides cover for a group of people. It is generally bought by small organizations to provide health coverage to their employees. Companies can create a self-insured plan or can pick a pre-designed plan from the insurance providers.

On the other hand, individual plans are purchased by an individual. It can be brought for a single person or can include your family as well.

  • Cost

Just like you get discounts for buying anything in bulk, you get group insurance plans at much lower costs. A set of pre-defined benefits is provided for a nominal amount. You can also get additional benefits by paying an additional amount for it. The premium amount is also trivial.

In contrast, individual insurance policies cost more and have a significant premium amount that is to be paid explicitly. However, you can choose a plan of your choice that covers and reimburse according to your specific needs.

  • Control and convenience

Obtaining group insurance is easier. Most often the meticulous examination of your medical history and other factors is waived by the insurance company. Every employee gets the preset insurance plan irrespective of individual condition. This ensures that your application cannot be rejected for any reason.

On the contrary, an individual plan is more convenient and gives you full control. You can set the policy terms and decide when to discontinue it. Unlike group policy, it is based on your personal financial, social, and medical conditions.

  • No claim bonus

In case of a group policy, you do not get any benefit for not making any claim throughout the tenure of the policy. But in case of individual policies, no claim is rewarded with a bonus as an incentive of staying healthy. Also in group insurance, if anyone of the members makes a claim, the cover for all others automatically gets reduced, if the employer does not pay extra. This is not the case with individual insurance and your cover amount depends only on your claims.

  • Applicability

A group insurance plan is applicable only as long as you are an employee. Once you retire or resign, you are not eligible for any cover or benefit from the policy. You have an option to convert it into an individual policy, but with a higher premium. The applicability of an individual policy is clear from the beginning and does not change throughout the tenure.